The 2024 income statement of Adrian Express reports sales of $14,400,000, cost of goods sold of $8,387,500, and net income of $1,550,000. Balance sheet information is provided in the following table. Assets Current assets: Cash Accounts receivable Inventory Long-term assets Total assets ADRIAN EXPRESS Balance Sheets December 31, 2024 and 2023 Liabilities and Stockholders' Equity Current liabilities Long-term liabilities Common stock Retained earnings Total liabilities and stockholders' equity Industry averages for the following four risk ratios are as follows: Average collection period Average days in inventory Current ratio Debt to equity ratio 25 days 60 days 2 to 1 50% 2024 $550,000 1,300,000 1,700,000 4,750,000 2023 1,350,000 4,190,000 $8,300,000 $7,200,000 2,250,000 1,900,000 2,180,000 $8,300,000 $710,000 950,000 $1,970,000 $1,610,000 2,350,000 Required: 1. Calculate the four risk ratios listed above for Adrian Express in 2024. 2. Do you think the company is more risky or less risky than the industry average? 1,900,000 1,340,000 $7,200,000

The 2024 income statement of Adrian Express reports sales of $14,400,000, cost of goods sold of $8,387,500, and net income of $1,550,000. Balance sheet information is provided in the following table. Assets Current assets: Cash Accounts receivable Inventory Long-term assets Total assets ADRIAN EXPRESS Balance Sheets December 31, 2024 and 2023 Liabilities and Stockholders' Equity Current liabilities Long-term liabilities Common stock Retained earnings Total liabilities and stockholders' equity Industry averages for the following four risk ratios are as follows: Average collection period Average days in inventory Current ratio Debt to equity ratio 25 days 60 days 2 to 1 50% 2024 $550,000 1,300,000 1,700,000 4,750,000 2023 1,350,000 4,190,000 $8,300,000 $7,200,000 2,250,000 1,900,000 2,180,000 $8,300,000 $710,000 950,000 $1,970,000 $1,610,000 2,350,000 Required: 1. Calculate the four risk ratios listed above for Adrian Express in 2024. 2. Do you think the company is more risky or less risky than the industry average? 1,900,000 1,340,000 $7,200,000

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter13: Financial Statement Analysis

Section: Chapter Questions

Problem 13.10E

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