HIJ Food & Beverage

Income Statement (in $ millions)

Item	Amount
Sales Revenue	14,000
Cost of Sales	9,000
Gross Profit	5,000
Operating Expenses	3,500
Operating Profit	1,500
Interest Expenses	300
Income Tax Expense	200
Net Income	1,000

Balance Sheet (in $ millions)

Assets

• Current Assets
  • Cash: 350
  • Accounts Receivable: 2,000
  • Inventory: 1,800
  • Total Current Assets: 4,150
• Long-Term Assets
  • Property, Plant & Equipment (net): 4,000
  • Other Assets: 3,500
  • Total Long-Term Assets: 7,500
• Total Assets: 11,650

Liabilities and Equity

• Current Liabilities
  • Trade Creditors: 1,500
  • Short-Term Bank Loans: 1,000
  • Total Current Liabilities: 2,500
• Long-Term Liabilities
  • Long-Term Debt: 5,500
  • Other Liabilities: 1,200
  • Total Long-Term Liabilities: 6,700
• Total Liabilities: 9,200
• Equity
  • Common Shares: 1,500
  • Retained Earnings: 950
  • Total Equity: 2,450
• Total Liabilities and Equity: 11,650

Required:

1. Calculate the operating profit margin and net profit margin for HIJ Food & Beverage.
2. Determine the company's current ratio and quick ratio.
3. Assess the company’s financial leverage using the debt-to-equity ratio.
4. HIJ Food & Beverage is considering a stock buyback program worth $500 million. Discuss the potential effects on the company’s equity and financial ratios.
5. Recommend strategies to enhance the company’s gross profit margin and overall profitability.