HH Com Using the financial statements for HH Company below: 1,067 1,392 45 70 Sa
ID: 2619734 • Letter: H
Question
HH Com Using the financial statements for HH Company below: 1,067 1,392 45 70 Sales Cost of goods sold eral and administrative Earnings before interest and taxes (EBI eral and state income taxes (406 et income HH Company Balance Sheet as of December 31, 20XX sets 80,500 unts Payable 132,000 Receivable 334,500 urrent portion of 84,000 nventories 240000 er current 114,000 liabilities 655,000 otal current liabilities otal current assets 330,000 Net fixed assets 256, 500 586,500 361,000 292,500 ng-term debt otal assets 947,500 otal liabilities ommon equity otal Liabilities & quity 947,500 1. Calculate the indicated ratios for HH om AverageslIndustry Averages urrent Ratio Davs sales outstanding (based on 36 .2 urnover 12.1 ixed asset turnover otal assets turnover eturn on sales eturn on assets eturn on eqU ebt ratio 1.20% 60% 9.00% 556 2. Discuss HH's strengths and weaknesses as revealed by your analysis. 3. Suppose HH doubles its sales as well as its inventories, accounts receivable, and common equity during the year. How would that information affect the validity of your ratio analysis?Explanation / Answer
2. The Company HH is performing very poor while comparing with the industry standards.
3. If sales , inventories, accounts recievables are doubled it will seriously effect the ratios.
Equation value Current ratio Current assets/ Current liabilities 655000/330000=1.98 Day sales Outstanding Accounts Recievable/average sales per day 334500/1067500/365=114.37 Inventory turnover Cost of Goods Sold/Average inventory 1392500/240000=5.80 Fixed Asset Turnover Sales/Average fixed assets 1067500/292500=3.65 Total assets turnover Sales/ Total assets 1067500/947500=1.12 Return sales Net Income/Sales 27300/1067500=2.55% Return on assets Net Income/Total assets 27300/947500=2.88% Return on Equity Net Income/Equity fund 27300/361000=7.56% Debt ratio Total liabilities/Total assets 586500/947500=61.89%Related Questions
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