Financial statement analysis, accounting homework help

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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.

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