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The 2018 income statement of Adrian Express reports sales of $14,706,000, cost of goods sold of $8,624,000, and net income of $1,560,000. Balance sheet information
The 2018 income statement of Adrian Express reports sales of $14,706,000, cost of goods sold of $8,624,000, and net income of $1,560,000. Balance sheet information is provided in the following table.
ADRIAN EXPRESS Balance Sheets December 31, 2018 and 2017 | ||||
2018 | 2017 | |||
Assets | ||||
Current assets: | ||||
Cash | $ | 560,000 | $ | 720,000 |
Accounts receivable | 1,320,000 | 960,000 | ||
Inventory | 1,720,000 | 1,360,000 | ||
Long-term assets | 4,760,000 | 4,200,000 | ||
Total assets | $ | 8,360,000 | $ | 7,240,000 |
Liabilities and Stockholders' Equity | ||||
Current liabilities | $ | 1,980,000 | $ | 1,620,000 |
Long-term liabilities | 2,260,000 | 2,360,000 | ||
Common stock | 1,920,000 | 1,920,000 | ||
Retained earnings | 2,200,000 | 1,340,000 | ||
Total liabilities and stockholders' equity | $ | 8,360,000 | $ | 7,240,000 |
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Industry averages for the following four risk ratios are as follows:
Average collection period | 25 days | |
Average days in inventory | 60 days | |
Current ratio | 2 to 1 | |
Debt to equity ratio | 50% | |
|
Required:
1. Calculate the four risk ratios listed above for Adrian Express in 2018.
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