Accounting Assignment
Below are the balance sheet and income statement for Happy Hamburger Company.
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Happy Hamburger Company
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Balance Sheet as of December 31, 20XX
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Assets
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Liabilities and Shareholder Equity
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Cash
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78,000
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Accounts payable
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136,000
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Accounts Receivable
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336,500
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Current portion of debt
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82,500
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Inventories
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225,000
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Other current liabilities
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114,000
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Total current assets
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639,500
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Total current liabilities
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332,500
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Net fixed assets
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310,000
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Long-term debt
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252,000
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Total assets
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949,500
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Total Liabilities
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584,500
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Common equity
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365,000
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Total Liabilities & Equity
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949,500
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Happy Hamburger Company
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Income Statement for the year ending December 31, 20XX
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Sales
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1,704,560
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Cost of goods sold
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1,489,000
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Selling, general and administrative expenses
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152,000
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Earnings before interest and taxes (EBIT)
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63,560
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Interest expense
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26,200
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Earnings before taxes (EBT)
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37,360
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Federal and state income taxes (40%)
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14,944
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Net Income
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22,416
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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.
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Happy Hamburger
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Industry Average
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Current ratio
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1.7
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Days sales outstanding (based on 365 day year)
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36 days
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Inventory turnover
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7.3
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Fixed asset turnover
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12.1
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Total asset turnover
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3.00
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Return on sales
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3.20%
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Return on assets
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3.60%
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Return on equity
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9.00%
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Debt ratio
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71%
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Use an Excel spreadsheet for your answers.