Calculate the profitability ratios for adrian express

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Reference no: EM132557920

The 2021 income statement of Adrian Express reports sales of $19,510,000, cost of goods sold of $12,300,000, and net income of $1,740,000. Balance sheet information is provided in the following table.

ADRIAN EXPRESS

Balance Sheets

December 31, 2020 and 2021

Assets                                                   2021                           2020

Current assets:

Cash                                            $720,000               $870,000

Accounts receivable                       1,625,000              1,115,000

Inventory                                      2,035,000             1,525,000

Long-term assets                          4,920,000                4,350,000

Total assets                                $9,300,000                $7,860,000

Liabilities and Stockholders' Equity

Current liabilities                            $1,942,000                $1,772,000

Long-term liabilities                         2,418,000                2,512,000

Common stock                                 1,925,000              1,915,000

Retained earnings                             3,015,000             1,661,000

Total liabilities and stockholders' equity $9,300,000            $7,860,000

Industry averages for the following profitability ratios are as follows:

Gross profit ratio 45%

Return on assets 25%

Profit margin 15%

Asset turnover 2.5times

Return on equity 35%

Required:

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

Profitability Ratios

Gross profit ratio%

Return on assets%

Profit margin%

Asset turnovertimes

Return on equity%

Reference no: EM132557920

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