E3-40B acct 504

Honeybee Hams, Inc.
Income Statement
For the Year Ended December 31, 2012
Sales Revenue $42,200
Less Cost of goods sold 25,500
Gross profit 16,700
Selling, administrative, and general expenses $10,000
Total operating expenses 10,000
Income before ioperations 6,700
Other income 0
Income before income taxes 6,700
Income tax expense 2,500
Net income $4,200
Profit margin Net income $4,200
Net sales $42,200
10.0%
This profit margin tells us that Honeybee earns 10 cents per share for every dollar of sales
after subtracting all expenses.
The higher the profit margin percentage the better because this means the company
earns more profit for each dollar of sales.
This profit margin tells us that Honeybee earns 10 cents per share for every dollar of sales
The higher the profit margin percentage the better because this means the company
Honeybee Hams, Inc.
Retained Earnings Statement
For the Year Ended December 31, 2012
Retained earnings, December 31, 2011 $4,600
Add Net Income $4,200
Subtotal $8,800
Less Dividend 1,400
Retained earnings, December 31, 2012 $7,400
Honeybee Hams, Inc.
Balance Sheet
December 31, 2012
Assets
Current assets
Cash
Accounts receivable
Inventories
Prepaid insurance
Total current assets
Property, plant, and equipment
Property, plant and equipment
Less Accumulated depreciation -store equipment
Other assets
Total assets
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable
Income tax payable
Total current liabilities
Long-term liabilities
Other liabilities
Total liabilities
Stockholders' Equity
Common stock
Retained earnings
Total stockholders' equity
Total liabilities and stockholders' equity
Inventory turnover ratio
Please note: We only have one inventory number so we do not have to calculate the average.
If we had two years worth of data, we would add each year's inventory together
and divide by 2.
This inventory ratio tells us that Honeybee turns over their average inventory
15 times per year.
A higher inventory turnover ratio is better because this means the
company is selling their inventory faster.
Days' sales in receivables (Average collection period)
Please note: We only have one accounts receivable number so we do not have to calculate the average.
If we had two years worth of data, we would add each year's accounts receivable together
and divide by 2.
This average collection period ratio tells us that Honeybee collects their accounts receivable on average every 16.4 days.
A lower average collection period is better because this means the
company is collecting their receivables faster.
Debt to total assets ratio
This debt ratio tells us that Honeybee has 47.3 cents of debt for every dollar of assets.
A lower debt ratio is considered better because there is less
financial risk.
$3,400
1,900
1,700
1,700
$8,700
$6,700
-2,500 4,200
9,700
$22,600
7,700
600
$8,300
2,400
10,700
4,500
7,400
11,900
$22,600
Cost of goods sold $25,500
Average inventory $1,700
15.0
We only have one inventory number so we do not have to calculate the average.
If we had two years worth of data, we would add each year's inventory together
This inventory ratio tells us that Honeybee turns over their average inventory
A higher inventory turnover ratio is better because this means the
Net sales $42,200
365 days 365
Daily sales $116
Average net accounts receivable $1,900
Average daily sales $116
Average collection period 16.4
We only have one accounts receivable number so we do not have to calculate the average.
If we had two years worth of data, we would add each year's accounts receivable together
This average collection period ratio tells us that Honeybee collects their accounts receivable on average every 16.4 days.
A lower average collection period is better because this means the
Total liabilities $10,700
Total assets $22,600
47.3%
This debt ratio tells us that Honeybee has 47.3 cents of debt for every dollar of assets.
A lower debt ratio is considered better because there is less