Question

Income statement and balance sheet data for Great Adventures, Inc., are provided below. GREAT ADVENTURES, INC. Income Statement For the Year Ended December 31, 2020 Revenues: Service revenue (clinic, racing, TEAM) $527,000 Sales revenue (MU watches) 102,000 $629,000 Total revenues Expenses: Cost of goods sold (MU watches) Operating expenses Depreciation expense Interest expense Income tax expense 62,000 303,476 42,000 28,924 52,200 Total expenses 488,600 Net income $140,400

Answer 1

Ratio Formula Work Answer a. Receivable Turnover Ratio 20.97 times Net Credit Sales Average Account receivables 629000 (33000+27000/2 629000 b. Average Collection Period 17.41 days 365 Receivable Turnover Ratio 365 20.97 Inventory Turnover Ratio 4.28 times Cost of Goods Sold Average Inventory 62000 (15800+13200)/2 d. d. Average Days in Inventory Average Days in Inventory - 365 85.28 365 Inventory Turnover Ratio days 365 4.28 - 365 313452433000+15800+11800 e. Current Ratio - Current Assets Current Assets Current Liabilities 5.87 5.87 to 1 10800+670+52200 f. Acid Test Ratio cash + Account Receivables Cash + Account Receivables Current Liabilities - 313452+33000 5.44 313452+33000 10800+670+52200 5.44 to 1 Debt to Equity 32.86% Total Liabilities Total Stockholder's Equity 10800+670+5220+408452 120000+1106000+151680-84000 Times Interest Earned 7.66 times Earning before Interest & Tax Interest Expense 140400+28924+52200 28924 Gross Profit Ratio (MU Watch) Gross Profit Sales _102000-62000 39.22% 39.22% 102000 b. Return on Assets Net Income Average total assets 14.18% 140400 (214150+1765802)/2 140400 Profit Margin 22.32% Net Income Net Sales/ Revenue 140400 629000 d. Asset Turnover 0.64 times Net Sales/ Revenue Average Total Assets 629000 (214150+1765802)/2 Return on Equity 19.51% Net Income Average stockholders equity 140400 (145280+1293680)/2 stockholders equity 2019 20000+125280 145280 stockholders equity 2020 120000+1106000+151680-84000 1293680