The Hill Company reported the following results:
Year 3 | Year 2 | Year 1 | |||
Income Statement | |||||
Revenue | 10,972 | 11,598 | 10,470 | ||
Cost of Goods Sold | 8,942 | 8,767 | 7,901 | ||
Selling, General & Admin. Expenses | 2,470 | 2,611 | 2,479 | ||
Interest expense | 76 | 80 | 28 | ||
Net Income | (516) | 140 | 62 | ||
Balance Sheet | |||||
Assets | |||||
Cash | 1,354 | 1,316 | 1,880 | ||
Prepaid expenses | 202 | 522 | 125 | ||
Accounts receivable | 375 | 250 | 231 | ||
Inventory | 745 | 698 | 455 | ||
Property & equipment (net) | 20,464 | 18,810 | 17,727 | ||
Total Assets | 23,140 | 21,596 | 20,418 | ||
Liabilities | |||||
Accounts payable | 2,824 | 743 | 678 | ||
Unredeemed gift cards | 410 | 850 | 636 | ||
Notes Payable | 15,457 | 18,048 | 17,024 | ||
Stockholders' Equity | |||||
Common Stock | 985 | 545 | 815 | ||
Retained Earnings | 3,464 | 1,410 | 1,265 | ||
Total Liabilities & Equity | 23,140 | 21,596 | 20,418 |
1a. What is the company's debt ratio for Year 1? Convert your final answer to a percentage, round to one decimal place and enter without the "%" sign (e.g. a final answer of 0.105678 would be entered as 10.6).
1b.What is the company's gross profit ratio for Year 3? Convert your final answer to a percentage, round to one decimal place and enter without the "%" sign (e.g. a final answer of 0.105678 would be entered as 10.6).
1c.What is the company's net profit ratio for Year 2? Convert your final answer to a percentage, round to one decimal place and enter without the "%" sign (e.g. a final answer of 0.105678 would be entered as 10.6).
1d.What is the company's return on investment ratio for Year 1? Convert your final answer to a percentage, round to one decimal place and enter without the "%" sign (e.g. a final answer of 0.105678 would be entered as 10.6).
1e.Based on the three years of data, has the company's return on investment ratio has improved, worsened, or stayed the same?
Answer 1a
company's debt ratio for Year 1= total liabilities / total assets = [678+636+17024] / 20418 = 18338/20418 = 0.90 or 89.8%
Answer 1b
Gross Profit % = Gross Profit / Sales
Year 3 = ( 10972 - 8942 ) / 10972 = 18.5%
Answer 1c
Net Profit % = net income / Sales
Year 2 = 140 / 11598 = 1.2%
Answer 1d
Return on Investment ratio year 1 = Net Income / total assets = 62/ 20418 *100 = 0.30%
Answer 1e
Based on the three years of data, the company's return on investment ratio has
b) worsened.
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