The 2021 income statement of Adrian Express reports sales of $22,710,000, cost of goods sold of $13,100,000, and net income of $2,380,000. Balance sheet information is provided in the following table. ADRIAN EXPRESS Balance Sheets December 31, 2021 and 2020 2021 2020 Assets Current assets: Cash $ 1,040,000 $ 1,030,000 Accounts receivable 2,025,000 1,355,000 Inventory 2,595,000 1,925,000 Long-term assets 5,240,000 4,510,000 Total assets $ 10,900,000 $ 8,820,000 Liabilities and Stockholders' Equity Current liabilities $ 2,294,000 $ 1,964,000 Long-term liabilities 2,706,000 2,704,000 Common stock 2,325,000 2,155,000 Retained earnings 3,575,000 1,997,000 Total liabilities and stockholders' equity $ 10,900,000 $ 8,820,000 Industry averages for the following profitability ratios are as follows: Gross profit ratio 45 % Return on assets 25 % Profit margin 15 % Asset turnover 18.5 times Return on equity 35 % Required: 1. Calculate the five profitability ratios listed above for Adrian Express. (Round your answers to 1 decimal place.) 2. Do you think the company is more profitable or less profitable than the industry average? multiple choice More profitable Less profitable
The 2021 income statement of Adrian Express reports sales of $22,710,000, cost of goods sold of $13,100,000, and net income of $2,380,000. Balance sheet information is provided in the following table. ADRIAN EXPRESS Balance Sheets December 31, 2021 and 2020 2021 2020 Assets Current assets: Cash $ 1,040,000 $ 1,030,000 Accounts receivable 2,025,000 1,355,000 Inventory 2,595,000 1,925,000 Long-term assets 5,240,000 4,510,000 Total assets $ 10,900,000 $ 8,820,000 Liabilities and Stockholders' Equity Current liabilities $ 2,294,000 $ 1,964,000 Long-term liabilities 2,706,000 2,704,000 Common stock 2,325,000 2,155,000 Retained earnings 3,575,000 1,997,000 Total liabilities and stockholders' equity $ 10,900,000 $ 8,820,000 Industry averages for the following profitability ratios are as follows: Gross profit ratio 45 % Return on assets 25 % Profit margin 15 % Asset turnover 18.5 times Return on equity 35 % Required: 1. Calculate the five profitability ratios listed above for Adrian Express. (Round your answers to 1 decimal place.) 2. Do you think the company is more profitable or less profitable than the industry average? multiple choice More profitable Less profitable
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 50E: Juroe Company provided the following income statement for last year: Juroes balance sheet as of...
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The 2021 income statement of Adrian Express reports sales of $22,710,000, cost of goods sold of $13,100,000, and net income of $2,380,000.
ADRIAN EXPRESS Balance Sheets December 31, 2021 and 2020 |
||||||||
2021 | 2020 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 1,040,000 | $ | 1,030,000 | ||||
2,025,000 | 1,355,000 | |||||||
Inventory | 2,595,000 | 1,925,000 | ||||||
Long-term assets | 5,240,000 | 4,510,000 | ||||||
Total assets | $ | 10,900,000 | $ | 8,820,000 | ||||
Liabilities and |
||||||||
Current liabilities | $ | 2,294,000 | $ | 1,964,000 | ||||
Long-term liabilities | 2,706,000 | 2,704,000 | ||||||
Common stock | 2,325,000 | 2,155,000 | ||||||
3,575,000 | 1,997,000 | |||||||
Total liabilities and stockholders' equity | $ | 10,900,000 | $ | 8,820,000 | ||||
Industry averages for the following profitability ratios are as follows:
Gross profit ratio | 45 |
% |
Return on assets | 25 | % |
Profit margin | 15 | % |
Asset turnover | 18.5 | times |
Return on equity | 35 | % |
Required:
1. Calculate the five profitability ratios listed above for Adrian Express. (Round your answers to 1 decimal place.)
2. Do you think the company is more profitable or less profitable than the industry average?
multiple choice
-
More profitable
-
Less profitable
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