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 % times Return on equity %

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The 2024 income statement of Adrian Express reports sales of $21,510,000, cost of goods sold of $12,800,000, and net income of $2,140,000. Balance sheet information is provided in the following table.
 

ADRIAN EXPRESS
Balance Sheets
December 31, 2024 and 2023
  2024 2023
Assets    
Current assets:    
Cash $920,000 $970,000
Accounts receivable 1,875,000 1,265,000
Inventory 2,385,000 1,775,000
Long-term assets 5,120,000 4,450,000
Total assets $10,300,000 $8,460,000
Liabilities and Stockholders' Equity    
Current liabilities $2,162,000 $1,892,000
Long-term liabilities 2,598,000 2,632,000
Common stock 2,175,000 2,065,000
Retained earnings 3,365,000 1,871,000
Total liabilities and stockholders' equity $10,300,000 $8,460,000


Industry averages for the following four risk ratios are as follows:
 

Gross profit ratio 45%  
Return on assets 25%  
Profit margin 15%  
Asset turnover 12.5 times
Return on equity 35%  


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?

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
%
times
Return on equity
%
Transcribed Image Text: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 % times Return on equity %
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