1. Calculate the following risk ratios for 2021 and 2022: (Round your answers to 1 decimal place.)...
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Question:
1. Calculate the following risk ratios for 2021 and 2022: (Round your answers to 1 decimal place.)
2. Calculate the following profitability ratios for 2021 and 2022: (Round your answers to 1 decimal place.)
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Income statement and balance sheet data for The Athletic Attic are provided below.
| THE ATHLETIC ATTIC | ||||||
| Income Statements | ||||||
| For the years ended December 31 | ||||||
| 2022 | 2021 | |||||
| Net sales | $ | 12,780,000 | $ | 11,350,000 | ||
| Cost of goods sold | 8,330,000 | 7,100,000 | ||||
| Gross profit | 4,450,000 | 4,250,000 | ||||
| Expenses: | ||||||
| Operating expenses | 1,770,000 | 1,720,000 | ||||
| Depreciation expense | 200,000 | 200,000 | ||||
| Interest expense | 57,000 | 57,000 | ||||
| Income tax expense | 604,000 | 520,000 | ||||
| Total expenses | 2,631,000 | 2,497,000 | ||||
| Net income | $ | 1,819,000 | $ | 1,753,000 | ||
| THE ATHLETIC ATTIC | ||||||||||||
| Balance Sheets | ||||||||||||
| December 31 | ||||||||||||
| 2022 | 2021 | 2020 | ||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash | $ | 242,000 | $ | 172,000 | $ | 238,000 | ||||||
| Accounts receivable | 1,007,000 | 757,000 | 777,000 | |||||||||
| Inventory | 1,742,000 | 1,372,000 | 1,042,000 | |||||||||
| Supplies | 147,000 | 117,000 | 92,000 | |||||||||
| Long-term assets: | ||||||||||||
| Equipment | 1,780,000 | 1,780,000 | 1,780,000 | |||||||||
| Less: Accumulated depreciation | (770,000 | ) | (570,000 | ) | (370,000 | ) | ||||||
| Total assets | $ | 4,148,000 | $ | 3,628,000 | $ | 3,559,000 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 224,300 | $ | 157,000 | $ | 147,300 | ||||||
| Interest payable | 5,700 | 0 | 5,700 | |||||||||
| Income tax payable | 57,000 | 52,000 | 47,000 | |||||||||
| Long-term liabilities: | ||||||||||||
| Notes payable | 670,000 | 670,000 | 670,000 | |||||||||
| Stockholders' equity: | ||||||||||||
| Common stock | 770,000 | 770,000 | 770,000 | |||||||||
| Retained earnings | 2,421,000 | 1,979,000 | 1,919,000 | |||||||||
| Total liabilities and stockholders’ equity | $ | 4,148,000 | $ | 3,628,000 | $ | 3,559,000 | ||||||
Problem 12-6B Part 1
Required:
1. Calculate the following risk ratios for 2021 and 2022: (Round your answers to 1 decimal place.)
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2. Calculate the following profitability ratios for 2021 and 2022: (Round your answers to 1 decimal place.)
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Expert Answer:
To calculate the risk ratios and profitability ratios for 2021 and 2022 we will use the given financ... View the full answer
Related Book For 
Financial Accounting
ISBN: 978-1259914898
5th edition
Authors: David Spiceland, Wayne M. Thomas, Don Herrmann
Posted Date:
