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Historical and Industry Average Ratios HTS Software , Inc. Industry 2011 Ratio 2010 2011 Current Ratio 2.6 2.7 1.8 1.75 Quick Ratio Inventory Turnover Average Collection Period Total Asset Tumover 4.5 4.7 40days 42 days 1.2 1 Debt Ratio 20% 21% Times Interest Eamed 8.9 43% Gross Profit Margin Operating Profit Margin Net Profit Margin 44% 30% 32% 20% 21% Retum on total assets 12% 13% Retum on Equity Price/Eamings Ratio 15% 16% 7.3

Historical and Industry Average Ratios HTS Software , Inc. Industry 2011 Ratio 2010 2011 Current Ratio 2.6 2.7 1.8 1.75 Quick Ratio Inventory Turnover Average Collection Period Total Asset Tumover 4.5 4.7 40days 42 days 1.2 1 Debt Ratio 20% 21% Times Interest Eamed 8.9 43% Gross Profit Margin Operating Profit Margin Net Profit Margin 44% 30% 32% 20% 21% Retum on total assets 12% 13% Retum on Equity Price/Eamings Ratio 15% 16% 7.3

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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You are provided with the Income Statement and the Balance Sheet of HTS software, Inc. for 2011.Required: (a) Calculate the ratios stated in the table below for HTS Software, Inc. for 2011 (b) Analyze the current financial position for the company from a time series and cross section    viewpoint. (c) Break your analysis into an evaluation of the firm’s liquidity, activity, debt, profitability and market ratios.
Historical and Industry Average Ratios HTS Software , Inc. Industry 2011 Ratio 2010 2011 Current Ratio 2.6 2.7 1.75 Quick Ratio Inventory Turnover 1.8 4.5 4.7 Average Collection Period 40days 42 days Total Asset Tumover 1.2 1 Debt Ratio 20% 21% Times Interest Eamed 9 8.9 Gross Profit Margin 43% 44% 30% 32% Operating Profit Margin Net Profit Margin 20% 21% Retum on total assets 12% 13% Return on Equity Price/Eamings Ratio 15% 16% 7.3 8
Transcribed Image Text:Historical and Industry Average Ratios HTS Software , Inc. Industry 2011 Ratio 2010 2011 Current Ratio 2.6 2.7 1.75 Quick Ratio Inventory Turnover 1.8 4.5 4.7 Average Collection Period 40days 42 days Total Asset Tumover 1.2 1 Debt Ratio 20% 21% Times Interest Eamed 9 8.9 Gross Profit Margin 43% 44% 30% 32% Operating Profit Margin Net Profit Margin 20% 21% Retum on total assets 12% 13% Return on Equity Price/Eamings Ratio 15% 16% 7.3 8
Balance Sheet HTS Software, Inc. December 31, 2011 Assets Cash EGP 740,000 Accounts receivable 580,000 760,000 2,080,000 Inventories Total current assets Gross fixed assets Less: Accumulated depreciation Net fixed assets 4,080,000 (1,200,000) 2,880,000 4,960,000 Total assets Liabilities and stockholders' equity Current liabilities Accounts payable Notes payable Total current liabilities Long-term debt EGP 400,000 600,000 1,000,000 400,000 1,400,000 Total liabilities Stockholders' equity: Common stock (60,000 shares) Paid-in capital in excess of par-CS Retained Earnings Total stockholders' equity Total liabilities & stockholders' equity 610,000 1,550,000 1,400,000 3,560,000 4,960,000 Income Statement HTS Software, Inc. For the Year Ended December 31, 2011 Sales Revenue EGP 3,990,000 2,280,000 1,710,000 Less: Cost of Goods Sold Gross Profits Less: Operating Expenses Operating Profits Less: Interest Expense 690,000 1,020,000 171,000 Net Profits Before Taxes 849,000 Less: Taxes 169,800 Net Profits After Taxes 679,200 * Current market prices per share EGP 50. There are 365 days in a year.
Transcribed Image Text:Balance Sheet HTS Software, Inc. December 31, 2011 Assets Cash EGP 740,000 Accounts receivable 580,000 760,000 2,080,000 Inventories Total current assets Gross fixed assets Less: Accumulated depreciation Net fixed assets 4,080,000 (1,200,000) 2,880,000 4,960,000 Total assets Liabilities and stockholders' equity Current liabilities Accounts payable Notes payable Total current liabilities Long-term debt EGP 400,000 600,000 1,000,000 400,000 1,400,000 Total liabilities Stockholders' equity: Common stock (60,000 shares) Paid-in capital in excess of par-CS Retained Earnings Total stockholders' equity Total liabilities & stockholders' equity 610,000 1,550,000 1,400,000 3,560,000 4,960,000 Income Statement HTS Software, Inc. For the Year Ended December 31, 2011 Sales Revenue EGP 3,990,000 2,280,000 1,710,000 Less: Cost of Goods Sold Gross Profits Less: Operating Expenses Operating Profits Less: Interest Expense 690,000 1,020,000 171,000 Net Profits Before Taxes 849,000 Less: Taxes 169,800 Net Profits After Taxes 679,200 * Current market prices per share EGP 50. There are 365 days in a year.
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