You are provided with the Income Statement and the Balance Sheet of HTS software, Inc.for 2011. Required: (b) Analyze the current financial position for the company from a time series and cross section viewpoint. (c) Break your analysis into an evaluation of the firm’s liquidity, activity, debt, profitability and market ratios. Historical and Industry Average Ratios HTS Software , Inc. Ratio 2010 2011 Industry2011 Current Ratio 2.6 2.08 2.7 Quick Ratio 1.8 1.32 1.75 Inventory Turnover 4.5 6 4.7 Average Collection Period 40days 9.125 42 days Total Asset Turnover 1.2 1.69 1 Debt Ratio 20% 28.2% 21% Times Interest Earned 9 5.9% 8.9 Gross Profit Margin 43% 42.8% 44% Operating Profit Margin 30% 25.5% 32% Net Profit Margin 20% 17% 21% Return on total assets 12% 4.11% 13% Return on Equity Price/Earnings Ratio 15% 7.3 19% 4.4 16% 8 Balance Sheet HTS Software, Inc. December 31, 2011 Assets Cash EGP 740,000 Accounts receivable 580,000 Inventories 760,000 Total current assets 2,080,000 Gross fixed assets 4,080,000 Less: Accumulated depreciation (1,200,000) Net fixed assets 2,880,000 Total assets 4,960,000 Liabilities and stockholders’ equity Current liabilities Accounts payable EGP 400,000 Notes payable 600,000 Total current liabilities 1,000,000 Long-term debt 400,000 Total liabilities 1,400,000 Stockholders’ equity: Common stock (60,000 shares) Paid-in capital in excess of par-CS Retained Earnings Total stockholders’ equity Total liabilities & stockholders’ equity 610,000 1,550,000 1,400,000 3,560,000 4,960,000 Income StatementHTS Software, Inc.For the Year Ended December 31, 2011 Sales Revenue EGP 3,990,000 Less: Cost of Goods Sold 2,280,000 Gross Profits 1,710,000 Less: Operating Expenses 690,000 Operating Profits 1,020,000 Less: Interest Expense 171,000 Net Profits Before Taxes 849,000 Less: Taxes 169,800 Net Profits After Taxes 679,200 * Current market prices per share EGP 50. ** There are 365 days in a year.

You are provided with the Income Statement and the Balance Sheet of HTS software, Inc . for 2011. Required: (b) Analyze the current financial position for the company from a time series and cross...

You are provided with the Income Statement and the Balance Sheet of HTS software, Inc.for 2011.

Required:

(b) Analyze the current financial position for the company from a time series and cross section viewpoint.

Historical and Industry Average Ratios HTS Software , Inc.
Ratio	2010	2011	Industry 2011
Current Ratio	2.6	2.08	2.7
Quick Ratio	1.8	1.32	1.75
Inventory Turnover	4.5	6	4.7
Average Collection Period	40days	9.125	42 days
Total Asset Turnover	1.2	1.69	1
Debt Ratio	20%	28.2%	21%
Times Interest Earned	9	5.9%	8.9
Gross Profit Margin	43%	42.8%	44%
Operating Profit Margin	30%	25.5%	32%
Net Profit Margin	20%	17%	21%
Return on total assets	12%	4.11%	13%
Return on Equity Price/Earnings Ratio	15% 7.3	19% 4.4	16% 8

Balance Sheet HTS Software, Inc. December 31, 2011
Assets
Cash	EGP 740,000
Accounts receivable	580,000
Inventories	760,000
Total current assets	2,080,000
Gross fixed assets	4,080,000
Less: Accumulated depreciation	(1,200,000)
Net fixed assets	2,880,000
Total assets	4,960,000
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	EGP 400,000
Notes payable	600,000
Total current liabilities	1,000,000
Long-term debt	400,000
Total liabilities	1,400,000
Stockholders’ equity:
Common stock (60,000 shares) Paid-in capital in excess of par-CS Retained Earnings Total stockholders’ equity Total liabilities & stockholders’ equity	610,000 1,550,000 1,400,000 3,560,000 4,960,000

Income Statement HTS Software, Inc. For the Year Ended December 31, 2011
Sales Revenue	EGP 3,990,000
Less: Cost of Goods Sold	2,280,000
Gross Profits	1,710,000
Less: Operating Expenses	690,000
Operating Profits	1,020,000
Less: Interest Expense	171,000
Net Profits Before Taxes	849,000
Less: Taxes	169,800
Net Profits After Taxes	679,200

^* Current market prices per share EGP 50.

^** There are 365 days in a year.

Jun 08, 2022