Which specific ratios led you to this conclusion

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Reference no: EM132027479

	TERRIFIC TOYS, INC.
	Income Statement for Year Ended December 31, 2016




		-------------2016----------------
		DOLLARS	% OF SALES
Sales Revenue		275,000	100.00%
Cost of Goods Sold		182,000	66.18%
Gross Profit		93,000	33.82%
Selling Expense		36,000	13.09%
General and Administrative Expense		28,000	10.18%
Depreciation Expense		8,000	2.91%
Operating Profits (EBIT)		21,000	7.64%
Interest Expense		7,500	2.73%
Profit Before Taxes		13,500	4.91%
Less: Taxes @ 40%		5,400	1.96%
Net Profit After Taxes		8,100	2.95%



	TERRIFIC TOYS, INC.
	Balance Sheet As of December 31, 2016


		-------------2016----------------
		DOLLARS	% OF ASSETS
ASSETS:
Cash		24,000	10.96%
Accounts Receivable		68,000	31.05%
Inventories		72,000	32.88%
Total Current Assets		164,000	74.89%

Net Fixed Assets		55,000	25.11%
TOTAL ASSETS		219,000	100.00%

LIABILITIES AND EQUITY:
Accounts Payable		25,000	11.42%
Notes Payable		50,000	22.83%
Accruals		29,500	13.47%
Total Current Liabilities		104,500	47.72%

Long-Term Debt		17,500	7.99%
TOTAL LIABILITIES		122,000	55.71%

Common Stock at Par Value		5,000	2.28%
Paid-In Capital in Excess of Par Value		20,000	9.13%
Retained Earnings		72,000	32.88%
TOTAL STOCKHOLDERS' EQUITY		97,000	44.29%

TOTAL LIABILITIES AND EQUITY		219,000	100.00%

Please show all calculations for the following:

e. Inventory Turnover: 21.7

f. Times Interest Earned (TIE): 4.8

Industry Average

g. Net Profit Margin: 1.0%

h. Return On Total Assets (ROA): 2.9%

i. Based on the ratios you have calculated above, does Terrific Toys, Inc. appear to be stronger or weaker than the industry average data? Which specific ratios led you to this conclusion?

Reference no: EM132027479

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