Reference no: EM131960451

Financial Analysis

HH Company

Using the financial statements for HH Company below:

Sales	1,067,500
:ost 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.

2. Discuss HH's strengths and weaknesses as revealed by your analysis.

3. Suppose HH doubles its sales as well as its inventories, accounts receivable, and common equity during the year. How would that information affect the validity of your ratio analysis?

Your paper should be three pages in length (excluding cover page and references) and formatted according to the Be sure to discuss and reference concepts taken from the assigned textbook reading and relevant research.