Ratio Analysis

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HCS219 - Week 2 Assignment


BALANCE SHEET	Company A	Company B
	12/31/13	12/31/13
ASSETS
Current Assets
Cash	835,245	1,966,236
Short-Term Investments	109,316	181,238
Accounts Receivable	209,328	382,905
Inventory	504,218	809,245
Supplies	66,823	102,910
Prepaid Expenses	18,744	31,452
Total Current Assets	1,743,674	3,473,986
Property, Plant & Equipment
Property	1,347,219	2,225,328
Building	3,462,981	5,732,176
Leasehold Improvements	657,234	1,116,946
Equipment	414,219	684,602
Furniture/Fixtures	227,845	347,381
Vehicles	94,285	157,984
Subtotal	6,203,783	10,264,417
(Less) Accumulated Depreciation	(1,871,235)	(3,091,266)
Net Property, Plant & Equipment	4,332,548	7,173,151
Other Assets	321,428
TOTAL ASSETS	6,397,650	10,647,137
LIABILITIES
Current Liabilities:
Accounts Payable	178,357	301,289
Taxes Payable	210,387	357,128
Accrued Payroll	483,218	781,680
Short-Term Notes Payable	16,843	26,791
Current Portion of Long-Term Debt	137,344	224,618
Total Current Liabilities	1,026,149	1,691,506
Long-Term Liabilities:
Long-Term Debt	455,188	968,235
Total Long-Term Liabilities	455,188	968,235
TOTAL LIABILITIES	1,481,337	2,659,741
NET WORTH
Common Stock	2,856,137	4,377,626
Preferred Stock	309,395	510,502
Treasury Stock	177,843	293,441
Retained Earnings	1,572,938	2,805,827
TOTAL NET WORTH	4,916,313	7,987,396
TOTAL LIABILITIES & NET WORTH	6,397,650	10,647,137
INCOME STATEMENT
	12/31/13	12/31/13
Gross Revenue	9,726,732	15,527,293
Sales Returns & Allowances	(283,452)	(356,782)
Total Revenue	9,443,280	15,170,511
Operating Expenses
Salaries Expenses	3,022,348	5,675,832
Supplies Expenses	327,521	533,410
Depreciation & Amort. Expenses	364,872	588,039
Other Expenses	2,317,295	3,822,537
Total Operating Expenses	6,032,036	10,619,818
Income from Operations	3,694,696	4,907,475
Other Income/Expenses
Interest Income	86,438	142,623
Interest Expense	23,467	38,721
Total Other Income/Expenses	62,971	103,902
Income Before Taxes	3,757,667	5,011,377
Income Taxes	1,052,147	1,403,186
Net Income	2,705,520	3,608,192
Maximum Annaul Debt Service (MADS)	168,000	310,000

Answer Key


Ratio Calculations
	Company A	Company B	Formula
Current Ratio	1.70	2.05	Current Assets / Current Liabilities
Quick Ratio	1.12	1.50	(Cash + Short-Term Investments + Net Accounts Receivable) / Current Liabilities
Days Cash Available	60.84	78.13	(Cash and Short-Term Investments) / (Daily Cash Operating Expenses*/365)
Debt-to-Net Worth	0.30	0.33	Total Liabilities / Net Worth
Debt Service Coverage Ratio	18.42	13.66	(Net Income plus Interest, Depreciation and Amortization) / Maximum Annual Debt Service
Operating Margin	27.82%	23.24%	Net Income / Total Revenue
Return on Equity	55.03%	45.17%	Net Income / Owner's Equity
* - Daily Cash Operating Expenses = Operating Expenses - Depreciation & Amortization Expense