Financial Statement Analysis
halramadhanCritical Thinking
Happy Hamburger Company
Below are the balance sheet and income statement for Happy Hamburger Company.
Happy Hamburger Company | ||||
Balance Sheet as of December 31, 20XX | ||||
Assets |
|
| Liabilities and Shareholder Equity |
|
Cash | 78,000 |
| Accounts payable | 136,000 |
Accounts Receivable | 336,500 |
| Current portion of debt | 82,500 |
Inventories | 225,000 |
| Other current liabilities | 114,000 |
Total current assets | 639,500 |
| Total current liabilities | 332,500 |
Net fixed assets | 310,000 |
| Long-term debt | 252,000 |
Total assets | 949,500 |
| Total Liabilities | 584,500 |
|
|
| Common equity | 365,000 |
|
|
| Total Liabilities & Equity | 949,500 |
Happy Hamburger Company | |
Income Statement for the year ending December 31, 20XX | |
Sales | 1,704,560 |
Cost of goods sold | 1,489,000 |
Selling, general and administrative expenses | 152,000 |
Earnings before interest and taxes (EBIT) | 63,560 |
Interest expense | 26,200 |
Earnings before taxes (EBT) | 37,360 |
Federal and state income taxes (40%) | 14,944 |
Net Income | 22,416 |
Required:
- Calculate the following ratios for the company.
- Explain whether the company is doing better or worse than the industry average for each ratio.
| Happy | Industry |
Current ratio |
| 1.7 |
Days sales outstanding (based on 365 day year) |
| 36 days |
Inventory turnover |
| 7.3 |
Fixed asset turnover |
| 12.1 |
Total asset turnover |
| 3.00 |
Return on sales |
| 3.20% |
Return on assets |
| 3.60% |
Return on equity |
| 9.00% |
Debt ratio |
| 71% |
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Use an Excel spreadsheet for your answers.
You need to do deep and clear analysis.
Show your work by writing the formulas.
Follow the instructions carefully.
It needs to be original work.
NO PLAGIARISM AND COPY FROM THE INTERNET.
9 years ago
15
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