The 2021 income statement of Adrian Express reports sales of $22,710,000, cost of goods sold of $13,100,000, and net income of $2,380,000. Balance sheet information is provided in the following table. ADRIAN EXPRESS Balance Sheets December 31, 2021 and 2020 2021 2020 Assets Current assets: Cash $ 1,040,000 $ 1,030,000 Accounts receivable 2,025,000 1,355,000 Inventory 2,595,000 1,925,000 Long-term assets 5,240,000 4,510,000 Total assets $ 10,900,000 $ 8,820,000 Liabilities and Stockholders' Equity Current liabilities $ 2,294,000 $ 1,964,000 Long-term liabilities 2,706,000 2,704,000 Common stock 2,325,000 2,155,000 Retained earnings 3,575,000 1,997,000 Total liabilities and stockholders' equity $ 10,900,000 $ 8,820,000 Industry averages for the following profitability ratios are as follows: Gross profit ratio 45 % Return on assets 25 % Profit margin 15 % Asset turnover 18.5 times Return on equity 35 % Required: 1. Calculate the five profitability ratios listed above for Adrian Express. (Round your answers to 1 decimal place.) 2. Do you think the company is more profitable or less profitable than the industry average? multiple choice More profitable Less profitable

Managerial Accounting: The Cornerstone of Business Decision-Making

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ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

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The 2021 income statement of Adrian Express reports sales of $22,710,000, cost of goods sold of $13,100,000, and net income of $2,380,000. Balance sheet information is provided in the following table.

ADRIAN EXPRESS Balance Sheets December 31, 2021 and 2020
	2021		2020
Assets
Current assets:
Cash	$	1,040,000		$	1,030,000
Accounts receivable		2,025,000			1,355,000
Inventory		2,595,000			1,925,000
Long-term assets		5,240,000			4,510,000
Total assets	$	10,900,000		$	8,820,000
Liabilities and Stockholders' Equity
Current liabilities	$	2,294,000		$	1,964,000
Long-term liabilities		2,706,000			2,704,000
Common stock		2,325,000			2,155,000
Retained earnings		3,575,000			1,997,000
Total liabilities and stockholders' equity	$	10,900,000		$	8,820,000

Industry averages for the following profitability ratios are as follows:


Gross profit ratio	45	%
Return on assets	25	%
Profit margin	15	%
Asset turnover	18.5	times
Return on equity	35	%

Required:
1. Calculate the five profitability ratios listed above for Adrian Express. (Round your answers to 1 decimal place.)

2. Do you think the company is more profitable or less profitable than the industry average?

multiple choice

More profitable
Less profitable

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