The 2012 income statement of Adrian Express reports sales of $16 million, cost of goods sold of $9.6 million, and net income of $1.6 million. Balance sheet information is provided in the following table. All amounts are in thousands.

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 2012.
2. Do you think the company is more risky or less risky than the industry average? Explain your answer.

Transcribed Image Text:

ADRIAN EXPRESS Balance Sheet December 31, 2012 and 2011 (S in 000s) 2012 2011 Assets Current assets: Cash Accounts receivable Inventory $ 600 1,400 1,800 4,800 $8,600 $ 760 1,000 1,400 4,240 $7.400 Long-term assets Total assets Liabilities and Stockholders' Equit Current liabilities Long-term liabilities Common stock Retained earnings $2,020 2,300 2,000 2,280 $8,600 $1,660 2,400 2,000 1,340 $7.400 Total liabilities and stockholders' equity