Question

Sales	1,067,500
Cost of goods sold	1,392,500
Selling, general and administrative	145,000
Earnings before interest and taxes (EBIT)	70,000
Federal and state income taxes (40%)	18,200
Net income	27,300

HH Company
Balance Sheet as of December 31, 20XX

Assets	80,500	Accounts Payable	132,000
Accounts Receivable	334,500	Current portion of debt	84,000
Inventories	240,000	Other current liabilities	114,000
Total current assets	655,000	Total current liabilities	330,000
Net fixed assets	292,500	Long-term debt	256,500
Total assets	947,500	Total liabilities	586,500
		Common equity	361,000
		Total Liabilities & Equity	947,500

1. Calculate the indicated ratios for HH.

	Company Averages	Industry Averages
Current Ratio		2.2
Days sales outstanding (based on 365-day year)		36 days
Inventory turnover		6.7
Fixed asset turnover		12.1
Total assets turnover		3.00
Return on sales		1.20%
Return on assets		3.60%
Return on equity		9.00%
Debt ratio		55%

Answer 1