Exercise 12-6 (Algo) Evaluate profitability ratios (LO12-4) The 2024 income statement of Adrian Express reports sales of $21,310,000, cost of goods sold of $12,750,000, and net income of $2,100,000. Balance sheet information is provided in the following table. Assets Current assets: Cash Accounts receivable. Inventory ADRIAN EXPRESS Balance Sheets December 31, 2024 and 2023 Long-term assets Total assets 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: Gross profit ratio: 45% 25% Return on assets Profit margin Asset turnover 15% Return on equity 11.5 35% times. 2024 2023 $900,000 $960,000 1,850,000 1,250,000 2,350,000 1,750,000 5,100,000 4,440,000 $10,200,000 $8,400,000 $2,140,000 $1,880,000 2,580,000 2,620,000 2,150,000 2,050,000 3,330,000 1,850,000 $10,200,000 $8,400,000 Required: 1. Calculate the five profitability ratios listed above for Adrian Express. 2. Do you think the company is more profitable or less profitable than the industry average?
Exercise 12-6 (Algo) Evaluate profitability ratios (LO12-4) The 2024 income statement of Adrian Express reports sales of $21,310,000, cost of goods sold of $12,750,000, and net income of $2,100,000. Balance sheet information is provided in the following table. Assets Current assets: Cash Accounts receivable. Inventory ADRIAN EXPRESS Balance Sheets December 31, 2024 and 2023 Long-term assets Total assets 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: Gross profit ratio: 45% 25% Return on assets Profit margin Asset turnover 15% Return on equity 11.5 35% times. 2024 2023 $900,000 $960,000 1,850,000 1,250,000 2,350,000 1,750,000 5,100,000 4,440,000 $10,200,000 $8,400,000 $2,140,000 $1,880,000 2,580,000 2,620,000 2,150,000 2,050,000 3,330,000 1,850,000 $10,200,000 $8,400,000 Required: 1. Calculate the five profitability ratios listed above for Adrian Express. 2. Do you think the company is more profitable or less profitable than the industry average?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Exercise 12-6 (Algo) Evaluate profitability ratios (LO12-4)
The 2024 income statement of Adrian Express reports sales of $21,310,000, cost of goods sold of $12,750,000, and net income of
$2,100,000. 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:
Gross profit ratio
Return on assets.
Profit margin
Asset turnover
Return on equity
45%
25%
15%
11.5
35%
times
2024
2023
$900,000
$960,000
1,850,000 1,250,000
2,350,000 1,750,000
5,100,000 4,440,000
$10,200,000 $8,400,000
$2,140,000 $1,880,000
2,580,000 2,620,000
2,150,000 2,050,000
3,330,000 1,850,000
$10,200,000 $8,400,000
Complete this question by entering your answers in the tabs below.
Required:
1. Calculate the five profitability ratios listed above for Adrian Express.
2. Do you think the company is more profitable or less profitable than the industry average?
Transcribed Image Text:15
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Calculate the five profitability ratios listed above for Adrian Express. (Round your answers to 1 decimal place.)
Profitability Ratios
Gross profit ratio
Return on assets
Profit margin
Asset turnover
Return on equity
%
%
%
times
%
Required 1
Required 2 >
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