Income statement and balance sheet data for Great Adventures, Inc., are provided
ID: 2534260 • Letter: I
Question
Income statement and balance sheet data for Great Adventures, Inc., are provided below.
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.
Calculate the following risk ratios for 2020. (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal places.)
2. Calculate the following profitability ratios for 2020. (Round your answers to 2 decimal places.)
GREAT ADVENTURES, INC.Income Statement
For the Year Ended December 31, 2020 Revenues: Service revenue (clinic, racing, TEAM) $561,000 Sales revenue (MU watches) 136,000 Total revenues $697,000 Expenses: Cost of goods sold (MU watches) 79,000 Operating expenses 305,176 Depreciation expense 59,000 Interest expense 30,624 Income tax expense 62,400 Total expenses 536,200 Net income $160,800
Explanation / Answer
E.Current Ratio= current assets/ current liabilities
Current assets= 319498+ 58500+18350+14350= 410698
Current liabilities= 13350+ 840+ 62400= 76590
Ratio= 410698/76590=5.36 to 1
F. Acid test ratio= quick assets/ current liab
Quick assets=current assets- inventory= 410698-18350= 392348
Ratio= 392348/76598= 5.12 to 1
G. Debt to equity ratio= debt/ equity*100
Equity= 120000+ 1105500+202860-93500=1334860
Ratio= 586748/1334860*100= 43.96%
H. Times interest earned ratio= Income + interest exp+ depreciation exp / interest
536200+ 62400+30624/ 30624= 20.55 times
A. Gross profit ratio on MU watches
Gross profit= sales- cogs
={ 136000-79000}/136000*100=14.91%
B. Return on assets ratio= Return/ average assets*100
Average assets= 1998198+264300/2=1131249
Ratio= 160800/1131249*100= 14.21%
C. Profit margin= net income/total revenue*100= 160800/697000*100= 23.07%
D. Asset turnover= revenue/average assets
= 697000/1131249= 0.62 times
E. Return on equity= income/ equity*100
160800/1334860*100= 12.05%
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