Calculate the five profitability ratios

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Reference no: EM133039632

Problem: The 2021 income statement of Adrian Express reports sales of $20,910,000, cost of goods sold of $12,650,000, and net income of $2,020,000. Balance sheet information is provided in the following table.

ADRIAN EXPRESS
Balance Sheets (December 31, 2021 and 2020)

 

2021

2021

Assets

 

 

Current assets:

 

 

Cash

$860,000 

$940,000 

Accounts receivable

 1,800,000 

 1,220,000 

Inventory

 2,280,000

 1,700,000

Long-term assets

5,060,000 

4,420,000

Total assets

$10,000,000 

$8,280,000

Liabilities and Stockholders' Equity

 

 

Current liabilities

$2,096,000  

$1,856,000

Long-term liabilities

 2,544,000 

 2,596,000

Common stock

 2,100,000

 2,020,000

Retained earnings

 3,260,000 

 1,808,000 

Total liabilities and stockholders' equity

$10,000,000 

$8,280,000 

Industry averages for the following profitability ratios are as follows:

Gross profit ratio

45

%

Return on assets

25

%

Profit margin

15

%

Asset turnover

9.5

times

Return on equity

35

%

Required:

1. Calculate the five profitability ratios listed above for Adrian Express. (Round your answers to 1 decimal place.)

Reference no: EM133039632

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