Recalling the Hobby Horse Case (page 158), using the following financial ratios and showing your calculations, identify the key issues and trends at Hobby Horse and why you believe Hobby Horse is headed in the right direction or wrong direction and what your financial ratio analysis is telling you about Hobby Horses financial condition and trends.

a.Asset Turnover

a.Debt to Equity

a.Receivables Turnover

a.Return on Assets

MINICASE Burchetts Green had enjoyed the bank training course, but it was good Mr. Green was familiar with the HH story. Founded in 1990, it to be starting his first real job in the corporate lending group. Earlier had rapidly built up a chain of discount stores selling materials for that morning the boss had handed him a set of financial statements for crafts and hobbies. However, last year a number of new store open The Hobby Horse Company Inc. (HH). "Hobby Horse," she said, "hasings coinciding with a poor Christmas season had pushed the com- a $45 million loan from us due at the end of September, and it is likelypany into loss. Management had halted all new construction and to ask us to roll it over. The company seems to have run into some put 15 of its existing stores up for sale. rough weather recently, and I have asked Furze Platt to go down there Mr. Green decided to start with the 6-year summary of HH's this afternoon and see what is happening. It might do you good to go balance sheet and income statement (Table 4.10). Then he turned along with her. Before you go, take a look at these financial statements to examine in more detail the latest position (Tables 4.11 and 4.12). and see what you think the problems are. Here's a chance for you to What appear to be the problem areas in HH? Do the financial use some of that stuff they taught you in the training course." ratios suggest questions that Ms. Platt and Mr. Green need to address? TABLE 4.10 Financial highlights for The Hobby Horse Company Inc., year ending March 31 2019 3,351 2018 3,314 312 2017 2,845 256 2016 2,796 243 58 2015 2,493 212 AR 2014 2,160 156 -9 37 63 60 43 39 189 145 76 0.55 469 0.42 435 Net sales EBIT Interest Taxes Net profit Earnings per share Current assets Net fixed assets Total assets Current liabilities Long-term debt Stockholders' equity Number of stores Employees 125 0.37 392 610 1,002 0.25 423 536 959 780 79 680 1.115 -49 -0.15 669 923 1,592 680 236 676 240 13,057 0.44 491 753 1.244 348 297 599 211 9,810 276 1,249 365 159 725 221 11,835 320 302 311 502 184 9.790 319 407 170 9,075 315 324 157 7,825