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Income statement and balance sheet data for The Athletic Attic are provided below. Required: 1. Calculate the following risk ratios for 2021 and 2022: a. Receivables turnover ratio. c. Current ratio. b. Inventory turnover ratio. d. Debt to equity ratio.

Income statement and balance sheet data for The Athletic Attic are provided below. Required: 1. Calculate the following risk ratios for 2021 and 2022: a. Receivables turnover ratio. c. Current ratio. b. Inventory turnover ratio. d. Debt to equity ratio.

Entrepreneurial Finance
Entrepreneurial Finance
6th Edition
ISBN:9781337635653
Author:Leach
Publisher:Leach
Chapter5: Evaluating Operating And Financial Performance
Section: Chapter Questions
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Income statement and balance sheet data for The Athletic Attic are provided below. Required: 1. Calculate the following risk ratios for 2021 and 2022: a. Receivables turnover ratio. c. Current ratio. b. Inventory turnover ratio. d. Debt to equity ratio. 2. Calculate the following profitability ratios for 2021 and 2022: a. Gross profit ratio. c. Profit margin. b. Return on assets. d. Asset turnover. 3. Based on the ratios calculated, determine whether overall risk and profitability improved from 2021 to 2022. THE ATHLETIC ATTIC Income Statements For the years ended December 31 2022 2021 Net sales $10,400,000 $8,900,000 Cost of goods sold Gross profit Еxpenses Operating expenses Depreciation expense Interest expense Income tax expense 6,800,000 5,450,000 3,600,000 3,450,000 1,600,000 200,000 40,000 400,000 2,240,000 1,360,000 $1230,000 1,600,000 210,000 50,000 360,000 2220,000 Total expenses Net income THE ATHLETIC ATTIC Balance Sheets December 31 2022 2021 2020 Assets Current assets: Cash Accounts receivable 990,000 1,725,000 130,000 $ 225,000 $ 164,000 $ 214,000 790,000 1,405,000 110,000 810,000 1,075,000 85,000 Inventory Supplies Long-term assets: Equipment Less: Accumulated depreciation Total assets 1,100,000 (600,000) 1,150,000 1,150,000 (420,000) $3.570,000 $3,199,000 $3.124,000 (210,000) Linbilities and Stockhokders' Equity Current liabilities: $ 175,000 $ 115,000 $ 91,000 4,000 40,000 Accounts payable Interest payable Income tax payable Long-term liabilities: Notes payable Stodkholders' equity: Common stock 5,000 31,000 40,000 500,000 600,000 600,000 600,000 700,000 700,000 Retained earnings 1,744,000 2251.000 Total liabilities and stockholders' equity $3570,000 $3.199,000 $3.124,000 1,697.000 E Expand
Transcribed Image Text:Income statement and balance sheet data for The Athletic Attic are provided below. Required: 1. Calculate the following risk ratios for 2021 and 2022: a. Receivables turnover ratio. c. Current ratio. b. Inventory turnover ratio. d. Debt to equity ratio. 2. Calculate the following profitability ratios for 2021 and 2022: a. Gross profit ratio. c. Profit margin. b. Return on assets. d. Asset turnover. 3. Based on the ratios calculated, determine whether overall risk and profitability improved from 2021 to 2022. THE ATHLETIC ATTIC Income Statements For the years ended December 31 2022 2021 Net sales $10,400,000 $8,900,000 Cost of goods sold Gross profit Еxpenses Operating expenses Depreciation expense Interest expense Income tax expense 6,800,000 5,450,000 3,600,000 3,450,000 1,600,000 200,000 40,000 400,000 2,240,000 1,360,000 $1230,000 1,600,000 210,000 50,000 360,000 2220,000 Total expenses Net income THE ATHLETIC ATTIC Balance Sheets December 31 2022 2021 2020 Assets Current assets: Cash Accounts receivable 990,000 1,725,000 130,000 $ 225,000 $ 164,000 $ 214,000 790,000 1,405,000 110,000 810,000 1,075,000 85,000 Inventory Supplies Long-term assets: Equipment Less: Accumulated depreciation Total assets 1,100,000 (600,000) 1,150,000 1,150,000 (420,000) $3.570,000 $3,199,000 $3.124,000 (210,000) Linbilities and Stockhokders' Equity Current liabilities: $ 175,000 $ 115,000 $ 91,000 4,000 40,000 Accounts payable Interest payable Income tax payable Long-term liabilities: Notes payable Stodkholders' equity: Common stock 5,000 31,000 40,000 500,000 600,000 600,000 600,000 700,000 700,000 Retained earnings 1,744,000 2251.000 Total liabilities and stockholders' equity $3570,000 $3.199,000 $3.124,000 1,697.000 E Expand
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