The comparative statements of Andy’s Art Corporation are presented below. 

Additional information: 

1. All sales were on account. 

2. Weighted-average common shares for both years was 57,000. 

Instructions 

Calculate the following ratios for 2024 and 2023. Indicate whether each ratio has improved or deteriorated. 

a. Gross profit margin 

b. Profit margin

c. Earnings per share

d. Receivables turnover

e. Collection period 

f. Inventory turnover

g. Days sales in inventory

h. Return on common shareholders’ equity  

i. Return on assets  

j. Current ratio 

k. Acid-test ratio  

l. Asset turnover 

m. Debt to total assets 

Calculate the operating cycle for Andy’s Arts and compare it with that of its nearest competitor, which has an operating cycle of 60 days. Does Andy’s Arts have a liquidity problem?

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ANDY'S ART CORPORATION Income Statement For the Year Ended December 31 Net sales Cost of goods sold Gross profit Selling and administrative expenses Income from operations Interest expense Profit before income tax Income tax expense Profit for the year 2024 $2,153,650 1,119,900 1,033,750 750,000 283,750 20,000 263,750 60,665 $ 203,085 2023 $1,828,500 1,010,500 818,000 516,000 302,000 18,000 284,000 85,000 $ 199,000