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Ratio Analysis

Please see the Balance Sheet and Income Statement for Fancy Floral Shop, Inc. for the fiscal

Year ended December 31, 2020.

FANCY FLORAL SHOP, INC.
	Income Statement for Year Ended December 31, 2020
		-------------2020---------------
		DOLLARS	% OF SALES
Sales Revenue		550,000	100.00%
Cost of Goods Sold		375,000	68.18%
Gross Profit		175,000	31.82%
Selling Expense		48,000	8.73%
General and Administrative Expense		52,000	9.45%
Depreciation Expense		18,000	3.27%
Operating Profits (EBIT)		57,000	10.36%
Interest Expense		9,000	1.64%
Profit Before Taxes		48,000	8.73%
Less: Taxes @ 40%		19,200	3.49%
Net Profit After Taxes		28,800	5.24%
	FANCY FLORAL SHOP, INC.
	Balance Sheet As of December 31, 2020
		-------------2020----------------
		DOLLARS	% OF ASSETS
ASSETS:
Cash		52,000	9.60%
Accounts Receivable		75,000	13.85%
Inventories		94,500	17.45%
Total Current Assets		221,500	40.90%
Net Fixed Assets		320,000	59.10%
TOTAL ASSETS		541,500	100.00%
LIABILITIES AND EQUITY:
Accounts Payable		80,000	14.77%
Notes Payable		45,000	8.31%
Accruals		25,500	4.71%
Total Current Liabilities		150,500	27.79%
Long-Term Debt		225,000	41.55%
TOTAL LIABILITIES		375,500	69.34%
Common Stock at Par Value		20,000	3.69%
Paid-In Capital in Excess of Par Value		45,000	8.31%
Retained Earnings		101,000	18.65%
TOTAL STOCKHOLDERS' EQUITY		166,000	30.66%
TOTAL LIABILITIES AND EQUITY		541,500	100.00%

Calculate the following ratios for 2020 for Fancy Floral Shop, Inc.:

Industry Average

a. Average Collection Period: 42 days

b. Debt Ratio: 64.7%

c. Return on Equity (ROE): 8.2%

d. Current Ratio: 1.3

e. Inventory Turnover: 5.1

Industry Average

f. Times Interest Earned (TIE): 4.8

g. Net Profit Margin: 3.78%

h. Return On Total Assets (ROA): 4.36%

e. Based on the ratios you have calculated above, does Fancy Floral Shop, Inc. appear to be

stronger or weaker than the industry average data? Which specific ratios led you to this

conclusion?