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 2015:
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 earnedratio.

Transcribed Image Text:

THE ATHLETIC ATTIC Income Statement For the year ended December 31, 2015 Net sales S8,900,000 5,450,000 3,450,000 Cost of goods sold Gross proft Expenses: Operating expenses Depreciation expense Interest expense Income tax expense $1,600,000 210,000 50,000 360,000 Total expenses 2,220,000 $1,230,000 Net income THE ATHLETIC ATTIC Balance Sheets December 31 2015 2014 Assets Current assets: Cash Accounts receivable Inventory Supplies S 164,000 790,000 1,405,000 110,000 S 214,000 810,000 1,075,000 85,000 Long-term assets: Equipment Less: Accumulated depreciation 1,150,000 (420,000) 3,199,000 1,150,000 (210,000) $3,124,000 Total assets Liabilities and Stockholders' Equi Current liabilities: S 115,000 40,000 600,000 Accounts payable Interest payable S 91,000 5,000 31,000 Income tax payable Long-tem liabilities: Notes payable Stockholders' equity: Common stock Retained earnings 600,000 700,000 1,744,000 3,199.000 700,000 1,697000 $3,124,000 Total liabilities and stockholders' equity