Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The income statement and balance sheet for HOYT, Inc. are provided below. (Note that the reported figures are expressed in thousands of dollars). HOYT, INC.

image text in transcribed
image text in transcribed
image text in transcribed
The income statement and balance sheet for HOYT, Inc. are provided below. (Note that the reported figures are expressed in thousands of dollars). HOYT, INC. Balance Sheets as of December 31, 2018 and 2019 (in 000s) 2018 2019 2018 2019 Assets Liabilities and Owners' Equity Current assets Current liabilities Cash $ 100 $ 115 Accounts payable $ 75 $ 165 Accounts receivable 170 170 Notes payable 100 120 Inventory 120 150 Total $ 390 $ 435 Total $ 175 $ 285 $ 250 $ 290 Long-term debt Owners' equity Common stock Accumulated retained earnings 190 $ 113 Fixed assets 275 347 Net plant and equipment $ 500 $ 600 Total Equity $ 465 $ 460 Total assets $ 890 $ 1,035 Total liabilities and owners' equity $ 890 $ 1,035 HOYT, INC. 2019 Income Statement (in 000s) Sales Cost of goods sold Depreciation 900 500 18 $ EBIT Interest paid 382 18 $ Taxable income Taxes 364 76 Net income $ 288 $ 216 Dividends Retained earnings 72 times e. Total debt ratio f. Equity Multiplier g. Times interest earned ratio h. Profit margin i. Return on assets j. Return on equity times % % % 0.6491 2.8497 31.1176 27.55% 23.40% 66.68% Requirement #2: Use the ratios you calculated in Requirement #1 and the industry averages given in the table above to determine if HOYT, Inc. is "above average" or "below average" in each of the following areas of financial performance. Operating Efficiency Liquidity Shareholder Return Financial Leverage Asset Use Efficiency (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) Requirement #3: Based on DuPont analysis, how would you explain the difference in the return on equity (ROE) for HOYT, Inc. vs. the industry as a whole in 2019 (i.e., why is the ROE for HOYT higher/lower than the ROE for the average firm in the industry)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions