Name: Toy Barn, Inc. Toy Barn, Inc. Balance Sheets Income Statements Toy Barn, Inc. (see Statements to the right) December 31, 2019 and 2020 Years ended December 31, 2019 and 2020 RATIO ANALYSIS - Homework 2019 2020 Favorable (F) Unfavorable (U) 2019 2020 2019 2020 ASSETS Current Assets: Cash 803,000 509,000 294,000 858,000 513,000 345,000 A. LIQUIDITY RATIOS (Measure short term debt paying ability) 1. WORKING CAPITAL = Current Assets - Current Liabs. 2. CURRENT RATIO = Current Assets / Current Liab. 3. QUICK RATIO = (Current Assets - Inventory) / Current Liab. 29,000 114,000 32,000 85,000 111,000 8,000 236,000 113,000 6,000 262,000 Net Sales Cost of Goods sold Gross Profit Operating Expenses: Selling Expenses Administrative Expenses Total Operating Expens Operating Income (EBIT) Interest Expense Taxes Expense Net Income Acct. Rec. Inventory Prepaid Exps. Total Current Assets Property, Plant & Equipment: Land Equipment Building Total Property, Plant & Equipment Total Assets B. PROFITABILITY RATIOS (Measures effectiveness in earning a return) 1 NET PROFIT MARGIN = Net Income / Net Sales 2. GROSS PROFIT MARGIN = Gross Profit / Net Sales 3. RETURN ON ASSETS (INVESTMENT) = Net Income / Total Assets 4. RETURN ON STOCKHOLDERS EQUITY = Net Income / Stkhldrs Equity 5. EARNINGS PER SHARE (EPS)= Net Income / #Shares Outstanding 6. PAYOUT RATIO = Cash Dividends / Net Income 114,000 123,000 237,000 57,000 14,000 17,000 126,000 118,000 244,000 101,000 24,000 33,000 44,000 18,000 300,000 90,000 18,000 417,000 90,000 525,000 787,000 26,000 408,000 644,000 Toy Barn, Inc. Statement of Retained Earnings Years ended December 31, 2019 and 2020 C. TURNOVER (ACTIVITY) RATIOS (Measures how long things take) 1. ACCOUNTS RECEIVABLE TURNOVER = Credit Sales / Accts Rec. 2. AVERAGE AGE OF RECEIVABLES = 365 / Receivable Turnover 3. INVENTORY TURNOVER = Cost of Goods Sold / Inventory 4. AVERAGE AGE OF INVENTORY = 365 / Inventory turnover 5. TOTAL ASSET TURNOVER = Sales/Total Assets LIABILITIES & STOCKHOLDERS EQUITY Current Liabilities: Accounts Payable Accrued Liabilities Total Current Liabilities Long-Term Liabilities Total Liabilities Stockholders Equity Common Stock, $10 par (10,000 shs issi Paid In Capital in Excess of Par Retained Earnings Total Stockholders Equity Total Liabilities & Stockholders Equity 68,000 58,000 126,000 198,000 324,000 73,000 69,000 142,000 289,000 431,000 Retained Earnings - Jan 1 Add: Net income Less: Dividends Retained Earnings - Dec 31 2019 113,000 26,000 (5,000) 134,000 2020 134,000 44,000 (8,000) 170,000 D. DEBT RATIOS (Measures extent and impact of debt financing) 1. DEBT TO TOTAL ASSETS = Total Debt / Total Assets 2. EQUITY RATIO = Tot. Stockholders Equity/Tot. Assets 3. TIMES INTEREST EARNED = EBIT / Interest Expense 100,000 100,000 86,000 86,000 134,000 170,000 320,000 356,000 644,000 787,000
