Calculate the following ratios for the company

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Reference no: EM131329931

 

Accounting Assignment

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:

1. Calculate the following ratios for the company.

2. Explain whether the company is doing better or worse than the industry average for each ratio.

 

Happy Hamburger

Industry Average

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.

Reference no: EM131329931

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