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A. Balance Sheet: Hytek Income Statement Year 2012

The balance sheet shows total liabilities of $750,000 which includes long term debts of $250,000 and current liabilities of $200,000. Total assets are also $750,000 consisting of current assets of $450,000 such as cash and receivables, and fixed assets of $300,000 after depreciation. The income statement shows net sales of $900,000 and net income of $100,000 for 2012. Various financial ratios are calculated including a current ratio of 2.25, acid test ratio of 0.75, leverage ratio of 0.6, and profit margin of 11%.

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60 views3 pages

A. Balance Sheet: Hytek Income Statement Year 2012

The balance sheet shows total liabilities of $750,000 which includes long term debts of $250,000 and current liabilities of $200,000. Total assets are also $750,000 consisting of current assets of $450,000 such as cash and receivables, and fixed assets of $300,000 after depreciation. The income statement shows net sales of $900,000 and net income of $100,000 for 2012. Various financial ratios are calculated including a current ratio of 2.25, acid test ratio of 0.75, leverage ratio of 0.6, and profit margin of 11%.

Uploaded by

marc chucuen
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© © All Rights Reserved
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Download as DOCX, PDF, TXT or read online on Scribd
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8-1

a. Balance Sheet

Liabilities Amount Amount


Equity Shares 90000
Retained Earnings 210000
Long term debts 250000
Current Liabilities
Unpaid Taxes 80000
Amount payable 120000 200000
Total 750000

Assets Amount Amount


Current Assets
Cash 50000
Amount receivable 100000
Inventory 300000 450000
Fixed Assets
Plant and Equipment 470000
Less Depreciation 170000 300000
Total 750000

Retained earnings for the year 2011= $130000


Net Income= $100000
Dividend=$20000

Retained earnings for the year 2012= $130000 + $100000 - $20000


= $210000

b. Income Statement

Hytek Income Statement year 2012

Net Sales $900000


-Cost of Goods Sold $500000

Expense $50000
Selling Expense $85000
G&A Expense $65000
Less other Expense $200000

Income $5000
Other expense - $25000
Net income $180000
Income Tax -$80000
Net income after tax for Hytek Corporation for 2012= $100000

8-2

a. Current Ratio

Current Ratio= Current Assets/ Current Liabilities

Current Assets= $450000


Current Liabilities= $200000
Current Ratio= $450000/$200000 =2.25
The current assets is more than twice the current liabilities so 2.25 is a good ratio.

b. Acid Test Ratio

Acid Test Ratio= Current Assets-Inventory/ Current liabilities

Inventory = $300000

Acid Test Ratio= $450000-$300000/$200000 =0.75.

0.75 means that the company was not able to pay it’s current liabilities.

c. Leverage Ratio

Leverage Ratio= Total debt/Total Assets

Total Debt= $450000


Total Assets= $750000

Leverage Ratio= $450000/$750000 =0.6

0.6 leverage ratio means that it is good for the company.

d. Profit Margin

Profit Margin= Net Income/ Net Sales

Net Income= $100000


Net Sales= $900000

Profit Margin= $100000/$900000 = 0.11

Profit Margin=11%

An 11% profit margin is considered average.

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