Question

The 2015 income statement of Adrian Express reports sales of $15.2 million cost of goods sold of $10 million, and net income of $3.2 million. Balance sheet information is provided in the following table.


Industry averages for the following four risk ratios are as follows:
Average collection period ........ 50 days
Average days in inventory ....... 60 days
Current ratio ............. 2 to 1
Debt to equity ratio ......... 60%

Required:
1. Calculate the four risk ratios listed above for Adrian Express in 2015.
2. Do you think the company is more risky or less risky than the industry average? Explain youranswer.


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  • CreatedJuly 15, 2014
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