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Required: 1. Calculate the four risk ratios listed above for Adrian Express in 2021. (Use 365 days in a year. Round your answers to 1 decimal place.) Risk Ratios Average collection period Average days in inventory Current ratio Debt to equity ratio 2. Do you think the company is more risky or less risky than the industry average? More risky O Less risky The 2021 income statement of Adrian Express reports sales of $13,797,000, cost of goods sold of $7,923,500, and net income of $1,530,000. Balance sheet information is provided in the following table. Assets Current assets: Cash Accounts receivable Inventory 25.0 days days to 1 % Long-term assets Total assets ADRIAN EXPRESS Balance Sheets December 31, 2021 and 2020 Liabilities and Stockholders' Equity Current liabilities. Long-term liabilities. Common stock Retained earnings Total liabilities and stockholders' equity Average collection period Average days in inventory Current ratio Debt to equity ratio 25 days 60 days 2 to 1 50% 2021 Industry averages for the following four risk ratios are as follows: 2020 $530,000 $ 690,000 930,000 1,260,000 1,660,000 1,330,000 4,730,000 4,170,000 $8,180,000 $7,120,000 $1,950,000 $1,590,000 2,230,000 2,330,000 1,860,000 1,860,000 2,140,000 1,340,000 $8,180,000 $7,120,000

Required: 1. Calculate the four risk ratios listed above for Adrian Express in 2021. (Use 365 days in a year. Round your answers to 1 decimal place.) Risk Ratios Average collection period Average days in inventory Current ratio Debt to equity ratio 2. Do you think the company is more risky or less risky than the industry average? More risky O Less risky The 2021 income statement of Adrian Express reports sales of $13,797,000, cost of goods sold of $7,923,500, and net income of $1,530,000. Balance sheet information is provided in the following table. Assets Current assets: Cash Accounts receivable Inventory 25.0 days days to 1 % Long-term assets Total assets ADRIAN EXPRESS Balance Sheets December 31, 2021 and 2020 Liabilities and Stockholders' Equity Current liabilities. Long-term liabilities. Common stock Retained earnings Total liabilities and stockholders' equity Average collection period Average days in inventory Current ratio Debt to equity ratio 25 days 60 days 2 to 1 50% 2021 Industry averages for the following four risk ratios are as follows: 2020 $530,000 $ 690,000 930,000 1,260,000 1,660,000 1,330,000 4,730,000 4,170,000 $8,180,000 $7,120,000 $1,950,000 $1,590,000 2,230,000 2,330,000 1,860,000 1,860,000 2,140,000 1,340,000 $8,180,000 $7,120,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Required: 1. Calculate the four risk ratios listed above for Adrian Express in 2021. (Use 365 days in a year. Round your answers to 1 decimal place.) Risk Ratios Average collection period Average days in inventory Current ratio Debt to equity ratio 2. Do you think the company is more risky or less risky than the industry average? More risky Less risky The 2021 income statement of Adrian Express reports sales of $13,797,000, cost of goods sold of $7,923,500, and net income of $1,530,000. Balance sheet information is provided in the following table. Assets Current assets: Cash 25.0 days days to 1 % Accounts receivable. Inventory ADRIAN EXPRESS Balance Sheets December 31, 2021 and 2020 Long-term assets Total assets Liabilities and Stockholders' Equity Current liabilities Long-term liabilities. Common stock Retained earnings Total liabilities and stockholders' equity Average collection period Average days in inventory Current ratio Debt to equity ratio. 25 days 60 days 2 to 1 50% 2021 $530,000 $ 690,000 930,000 1,260,000 1,660,000 2020 Industry averages for the following four risk ratios are as follows: 1,330,000 4,730,000 4,170,000 $8,180,000 $7,120,000 $1,950,000 $1,590,000 2,230,000 2,330,000 1,860,000 1,860,000 2,140,000 1,340,000 $8,180,000 $7,120,000
Transcribed Image Text:Required: 1. Calculate the four risk ratios listed above for Adrian Express in 2021. (Use 365 days in a year. Round your answers to 1 decimal place.) Risk Ratios Average collection period Average days in inventory Current ratio Debt to equity ratio 2. Do you think the company is more risky or less risky than the industry average? More risky Less risky The 2021 income statement of Adrian Express reports sales of $13,797,000, cost of goods sold of $7,923,500, and net income of $1,530,000. Balance sheet information is provided in the following table. Assets Current assets: Cash 25.0 days days to 1 % Accounts receivable. Inventory ADRIAN EXPRESS Balance Sheets December 31, 2021 and 2020 Long-term assets Total assets Liabilities and Stockholders' Equity Current liabilities Long-term liabilities. Common stock Retained earnings Total liabilities and stockholders' equity Average collection period Average days in inventory Current ratio Debt to equity ratio. 25 days 60 days 2 to 1 50% 2021 $530,000 $ 690,000 930,000 1,260,000 1,660,000 2020 Industry averages for the following four risk ratios are as follows: 1,330,000 4,730,000 4,170,000 $8,180,000 $7,120,000 $1,950,000 $1,590,000 2,230,000 2,330,000 1,860,000 1,860,000 2,140,000 1,340,000 $8,180,000 $7,120,000
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