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 RatiosHTS Software , Inc.Industry2011Ratio20102011Current Ratio2.62.71.75Quick RatioInventory Turnover1.84.54.7Average Collection Period40days42 daysTotal Asset Tumover1.21Debt Ratio20%21%Times Interest Eamed98.9Gross Profit Margin43%44%30%32%Operating Profit MarginNet Profit Margin20%21%Retum on total assets12%13%Return on EquityPrice/Eamings Ratio15%16%7.38 Balance SheetHTS Software, Inc.December 31, 2011AssetsCashEGP 740,000Accounts receivable580,000760,0002,080,000InventoriesTotal current assetsGross fixed assetsLess: Accumulated depreciationNet fixed assets4,080,000(1,200,000)2,880,0004,960,000Total assetsLiabilities and stockholders' equityCurrent liabilitiesAccounts payableNotes payableTotal current liabilitiesLong-term debtEGP 400,000600,0001,000,000400,0001,400,000Total liabilitiesStockholders' equity:Common stock (60,000 shares)Paid-in capital in excess of par-CSRetained EarningsTotal stockholders' equityTotal liabilities & stockholders' equity610,0001,550,0001,400,0003,560,0004,960,000Income StatementHTS Software, Inc.For the Year Ended December 31, 2011Sales RevenueEGP 3,990,0002,280,0001,710,000Less: Cost of Goods SoldGross ProfitsLess: Operating ExpensesOperating ProfitsLess: Interest Expense690,0001,020,000171,000Net Profits Before Taxes849,000Less: Taxes169,800Net Profits After Taxes679,200* Current market prices per share EGP 50.There are 365 days in a year.

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Answered: Historical and Industry Average Ratios…

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

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.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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