Question

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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)	$535,000
Sales revenue (MU watches)	110,000
Total revenues		$645,000
Expenses:
Cost of goods sold (MU watches)	66,000
Operating expenses	303,876
Depreciation expense	46,000
Interest expense	29,324
Income tax expense	54,600
Total expenses		499,800
Net income		$145,200

GREAT ADVENTURES, INC. Balance Sheets December 31, 2020 and 2019
		2020			2019	Increase (I) or Decrease (D)
Assets
Current assets:
Cash	$	298,404		$	134,000	164,404	(I)
Accounts receivable		39,000			31,000	8,000	(I)
Inventory		16,400			13,600	2,800	(I)
Other current assets		12,400			10,600	1,800	(I)
Long-term assets:
Land		250,000			0	250,000	(I)
Buildings		1,200,000			0	1,200,000	(I)
Equipment		61,000			61,000
Less: Accumulated depreciation		(70,250)			(24,250)	46,000	(I)
Total assets	$	1,806,954		$	225,950
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		$11,400			$8,600	2,800	(I)
Interest payable		710			710
Income tax payable		54,600			36,000	18,600	(I)
Long-term liabilities:
Notes payable		450,404			28,000	422,404	(I)
Stockholders' equity:
Common stock		130,000			30,000	100,000	(I)
Paid-in capital		1,106,000			0	1,106,000	(I)
Retained earnings		143,840			122,640	21,200	(I)
Treasury stock		(90,000)			0	(90,000)	(I)
Total liabilities and stockholders' equity	$	1,806,954		$	225,950

As you can tell from the financial statements, 2020 was an especially busy year. Tony and Suzie were able to use the $1.2 million received from the issuance of 100,000 shares of stock to hire a construction company for $1 million to build the cabins, dining facilities, ropes course, and the outdoor swimming pool. They even put in a baby pool to celebrate the birth of their firstborn son, little Venture Matheson. Assume all sales and services are on credit.

Required: 1. Calculate the following risk ratios for 2020. (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal places.) a. Receivables turnover ratio b. Average collection period C. | Inventory turnover ratio d. Average days in inventory e. Current ratio f. Acid-test ratio g. Debt to equity ratio h. Times interest earned ratio times days times days to 1 to 1 times 2. Calculate the following profitability ratios for 2020·(Round your answers to 2 decimal places.) a. Gross profit ratio (on the MU watches) b. Return on assets c. Profit margin d. Asset turnover e. Return on equity times

Answer 1