The following income statement and balance sheets for The Athletic Attic are provided. Required: Assuming that all
Question:
The following income statement and balance sheets for The Athletic Attic are provided.
Required:
Assuming that all sales were on account, calculate the following risk ratios for 2024:
1. Receivables turnover ratio.
2. Average collection period.
3. Inventory turnover ratio.
4. Average days in inventory.
5. Current ratio.
6. Acid-test ratio.
7. Debt to equity ratio.
8. Times interest earned ratio.
THE ATHLETIC ATTIC Income Statement For the year ended December 31, 2024 Net sales Cost of goods sold Gross profit Expenses: Operating expenses Depreciation expense Interest expense Income tax expense Total expenses Net income $1,600,000 210,000 50,000 360,000 $8,900,000 5,450,000 3,450,000 2,220,000 $1,230,000
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Assuming that all sales were on account Receivables turnover ratio Net Sales Average Accounts ...View the full answer
Related Video
Days sales outstanding (DSO) is a measure of the average number of days that it takes a company to collect payment for a sale. DSO is often determined on a monthly, quarterly, or annual basis. To compute DSO, divide the average accounts receivable during a given period by the total value of credit sales during the same period and multiply the result by the number of days in the period being measured.
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