Income statement for happy hamburger company

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Reference no: EM131812554

Complete the following questions using Microsoft Word or Excel, as appropriate. Review the grading rubric to confirm you are meeting the assignment requirements.

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

85,000


Accounts payable

145,000

Accounts Receivable

340,000


Current portion of debt

90,000

Inventories

250,000


Other current liabilities

114,000

Total current assets

675,000


Total current liabilities

349,000

Net fixed assets

360,000


Long-term debt

265,000

Total assets

1,035,000


Total liabilities

614,000




Common equity

421,000




Total liabilities & equity

1,035,000

Happy Hamburger Company

Income Statement for the year ending December 31, 20XX



Sales

1,810,000

Cost of goods sold

1,510,000

Selling, general and administrative expenses

152,000

Earnings before interest and taxes (EBIT)

148,000

Interest expense

26,200

Earnings before taxes (EBT)

121,800

Federal and state income taxes (40%)

48,720

Net Income

73,080

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

Industry


Hamburger

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%

Reference no: EM131812554

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