Financial statement analysis, accounting homework help
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% |
Use an Excel spreadsheet for your answers.
