Problem 12-48 (Algo) Calculate risk ratios (LO12-3)
The following income statement and balance sheets for The Athletic Attic are provided.
THE ATHLETIC ATTIC
Income Statement
For the Year Ended December 31, 2024
Net sales $8,800,000
Cost of goods sold 5,660,000
Gross profit 3,140,000
Expenses:
Operating expenses $1,550,000
Depreciation expense 200,000
Interest expense 40,000
Income tax expense 100,000
Total expenses 2,140,000
Net income $1,260,000
THE ATHLETIC ATTIC
Balance Sheets
December 31
2024 2023
Assets
Current assets:
Cash $154,000 $126,000
Accounts receivable 740,000 700,000
Inventory 330,000 275,000
Supplies 20,000 15,000
Total current assets 1,244,000 1,116,000
Long-term assets:
Equipment 1,000,000 1,100,000
Less: Accumulated depreciation (200,000) (220,000)
Total assets $1,044,000 $2,000,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $105,000 $91,000
Interest payable 0 4,000
Income tax payable 35,000 30,000
Total current liabilities 140,000 125,000
Long-term liabilities:
Notes payable 600,000 600,000
Stockholders’ equity:
Common stock 500,000 500,000
Retained earnings 600,000 750,000
Total liabilities and stockholders’ equity $1,809,000 $1,964,000
Required:
Assuming that all sales were on account, calculate the following risk ratios for 2024. (Use 360 days a year. Round your final answers to 1 decimal place.)
1. Receivables turnover ratio times
2. Average collection period days
3. Inventory turnover ratio times
4. Average days in inventory days
5. Current ratio
6. Acid-test ratio
7. Debt to equity ratio %
8. Times interest earned ratio times
