Question
The following income statement and balance sheets for The Sports Shack are provided. The Sports Shack Income Statement For the year ended December 31, 2021
The following income statement and balance sheets for The Sports Shack are provided.
The Sports Shack
Income Statement
For the year ended December 31, 2021
Sales revenue | $6,600,000 |
Cost of goods sold | 4,700,000 |
Gross profit | 1,900,000 |
Expenses: |
|
Operating expenses | 1,400,000 |
Depreciation expense | 100,000 |
Interest expense | 50,000 |
Income tax expense | 80,000 |
Total expenses | 1,630,000 |
Net income | $270,000 |
The Sports Shack
Balance Sheets
December 31
Assets | 2021 | 2020 |
Current assets: |
|
|
Cash | $218,000 | $196,000 |
Accounts receivable | 680,000 | 880,000 |
Inventory | 1,250,000 | 1,100,000 |
Supplies | 90,000 | 65,000 |
Long-term assets: |
|
|
Equipment | 1,200,000 | 900,000 |
Less: Accumulated depreciation | (350,000) | (250,000) |
Total assets | $3,088,000 | $2,891,000 |
Liabilities and Stockholders' Equity
Current liabilities: |
|
|
Accounts payable | $65,000 | $55,000 |
Interest payable | 4,000 | 6,000 |
Income tax payable | 40,000 | 30,000 |
Long-term liabilities: |
|
|
Notes payable | 400,000 | 300,000 |
Stockholders' equity: |
|
|
Common stock | 900,000 | 900,000 |
Retained earnings | 1,679,000 | 1,600,000 |
Total liabilities and equity | $3,088,000 | $2,891,000 |
Required: Assuming that all sales were on account, calculate the following risk ratios for 2021 (round to one decimal place). (Please indicate if your answer is days, times, or a %. If none of these apply, just give your numerical answer)
Receivables turnover ratio:
Average collection period:
Inventory turnover ratio:
Average days in inventory:
Current ratio:
Quick ratio:
Debt to equity ratio:
Times interest earned ratio:
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started