# Question

The 2015 income statement of Adrian Express reports sales of $19,310,000, cost of goods sold of $12,250,000, and net income of $1,700,000. Balance sheet information is provided in the following table.

Industry averages for the following four risk ratios are as follows:

Average collection period ....... 25 days

Average days in inventory ........ 60 days

Current ratio ............ 2 to 1

Debt to equity ratio ......... 50%

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.

Industry averages for the following four risk ratios are as follows:

Average collection period ....... 25 days

Average days in inventory ........ 60 days

Current ratio ............ 2 to 1

Debt to equity ratio ......... 50%

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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