1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
marta [7]
3 years ago
13

The 2021 income statement of Adrian Express reports sales of $20,710,000, cost of goods sold of $12,600,000, and net income of $

1,980,000. Balance sheet information is provided in the following table.
ADRIAN EXPRESS
Balance Sheets
December 31, 2021 and 2020
2021 2020
Assets
Current assets:
Cash $840,000 $930,000
Accounts receivable 1,775,000 1,205,000
Inventory 2,245,000 1,675,000
Long-term assets 5,040,000 4,410,000
Total assets $ 9,900,000 $8,220,000
Liabilities and Stockholders' Equity
Current liabilities $ 2,074,000 $1,844,000
Long-term liabilities 2,526,000 2,584,000
Common stock 2,075,000 2,005,000
Retained earnings 3,225,000 1,787,000
Total liabilities and stockholders' equity
$9,900,000 $8,220,000
Industry averages for the following profitability ratios are as follows:
Gross profit ratio 45 %
Return on assets 25 %
Profit margin 15 %
Asset turnover 8.5 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?
More profitable
Less profitable
Business
1 answer:
Verizon [17]3 years ago
6 0

Answer:

Adrian Express

1. Five Profitability Ratios:

Gross profit ratio: = 39.2%

Return on assets = 20%

Profit margin = 9.6%

Asset turnover = 2.1 times

Return on equity = 37.4%

2. I think the company is:

Less profitable

than the industry average.

Explanation:

a) Data and Calculations:

Sales Revenue        $20,710,000

Cost of goods sold $12,600,000

Gross profit                $8,110,000

Net income               $1,980,000

ADRIAN EXPRESS

Balance Sheets

December 31, 2021 and 2020

                                                                          2021                  2020

Assets

Current assets:

Cash                                                              $840,000            $930,000

Accounts receivable                                     1,775,000            1,205,000

Inventory                                                      2,245,000            1,675,000

Current assets                                          $4,860,000          $3,810,000

Long-term assets                                        5,040,000            4,410,000

Total assets                                             $ 9,900,000         $8,220,000

Liabilities and Stockholders' Equity

Current liabilities                                     $ 2,074,000          $1,844,000

Long-term liabilities                                   2,526,000           2,584,000

Common stock                                          2,075,000           2,005,000

Retained earnings                                    3,225,000             1,787,000

Total Equity                                               5,300,000           3,792,000

Total liabilities & stockholders' equity   $9,900,000         $8,220,000

Industry averages for the following profitability ratios are as follows:

Gross profit ratio 45 %

Return on assets 25 %

Profit margin 15 %

Asset turnover 8.5 times

Return on equity 35 %

Gross profit ratio: = Gross profit/Sales * 100

= $8,110,000/$20,710,000 * 100

= 39.2%

Return on assets = Net income/Assets * 100

= $1,980,000/$9,900,000 * 100

= 20%

Profit margin = Net Income/Sales * 100

= $1,980,000/$20,710,000 * 100

= 9.6%

Asset turnover = Sales/Total Assets

= $20,710,000/$9,900,000 = 2.1 times

Return on equity = Net Income/Total Equity * 100

= $1,980,000/$5,300,000 * 100

= 37.4%

You might be interested in
Clay Corporation manufactures two styles of lampslong dasha Bedford Lamp and a Lowell Lamp. The following per unit data are​ ava
mote1985 [20]

Answer:

$ 10

Explanation:

Given:

For Bedford lamp

Sales price = $ 26

Variable cost = $ 16

Machine hours required per unit = 1

Now,

the contribution margin per unit = Sales price - Variable cost

= $ 26 - $ 16

= $ 10

therefore,

the contribution margin per machine hour is calculated as:

= contribution margin / machine hours

or

= $ 10 / 1

or

= $ 10

hence,

the contribution margin per machine hour for the bedford lamp is $ 10

4 0
3 years ago
Marple Company's budgeted production in units and budgeted raw materials purchases over the next three months are given below:
Vlada [557]

Answer: 75,000 units

Explanation:

Come up with an expression to solve this.

Assume the budgeted production needed is P.

P needs 2 pounds of raw materials per unit so raw materials needed are 2P.

Beginning raw materials for February have to be 30% of the needs of February;

= 30% * 2P

= 0.6P

Ending raw materials for February have to be 30% of March needs so;

= 30% * 100,000 * 2 pounds

= ‭60,000‬ pounds

So;

Budgeted raw materials purchase for February = Raw materials needed + Ending raw materials - Beginning raw materials

165,000 = 2P + 60,000 - 0.6P

1.4P = 165,000 - 60,000

P =  (165,000 - 60,000) / 1.4

= 75,000 units

5 0
2 years ago
Over the course of 50 years, Dexter grew his company to eight package shipping stores. With his retirement approaching and the i
Butoxors [25]

Answer:

B. Defensive Strategy

Explanation:

One thing that is inevitable in business is competition. Dexter decided to use a defensive strategy for his business with his retirement coming in and competition becoming even stronger.

Defensive strategies are management techniques used to "fend off attacks" from competitors. It helps the decision maker hold on to shares of the market. Some companies do this to lower the risk of being attacked when they perceive attacks coming from competitors so in turn, those competitors can focus on other competitors in the market.

8 0
3 years ago
Abc airlines hires flight attendants from diverse backgrounds and puts them through an extensive training and orientation progra
zysi [14]

Abc airlines is adopting an <u>"assimilate"</u> option for managing diversity.


The idea of diversity includes acknowledgment and regard. It implies understanding that every individual is one of a kind, furthermore, perceiving our individual contrasts. These can be along the measurements of race, ethnicity, sex, sexual introduction, financial status, age, physical capacities, religious convictions, political convictions, or different philosophies. It is the investigation of these distinctions in a sheltered, positive, and supporting condition. It is tied in with seeing each other and moving past straightforward resistance to grasping and praising the rich measurements of assorted variety contained inside every person.

6 0
2 years ago
Fixed manufacturing overhead costs are included as part of Work in Process inventory under ______. Multiple choice question. var
Leona [35]

In accounting, the fixed manufacturing overhead costs are included as part of Work in Process inventory under the absorption costing only

.

<h3>What is an absorption costing?</h3>

An absorption costing is an accounting method that captures all costs associated with the manufacturing of a product.

Hence, the practice is that the fixed manufacturing overhead costs are included as part of Work in Process inventory under the absorption costing only.

Therefore, the Option D is correct.

Read more about absorption costing

<em>brainly.com/question/26276034</em>

6 0
2 years ago
Other questions:
  • In a team, if someone gets stuck with the selected tasks for the iteration, what is the immediate next step?
    6·1 answer
  • What are the four challenges associated with telecommuting mentioned in the article​
    5·2 answers
  • The measurement that equals cash receipts minus cash payments over a given period of time, is referred to as:
    11·1 answer
  • In two to three sentences, describe how making minimum payments on credit card balances increases the total cost.
    9·1 answer
  • Robert G. Flanders Jr., the state-appointed receiver for Central Falls, RI, said his city's declaration of bankruptcy had proved
    8·1 answer
  • A well-known Hollywood actress owns a home in Beverly Hills and another one on the French Riviera. She owns her own movie produc
    12·1 answer
  • When output increases, the PPC of the economy , indicating in the economy.
    9·2 answers
  • A music streaming service provides its customers with recommendations based on their past listening behavior. This is an example
    13·1 answer
  • If the number of employed persons in a country equals 24 million, the number of unemployed persons equals 8 million, and the num
    8·1 answer
  • Cardinal Health bonds have an annual coupon rate of 3.4 percent and a par value of $1,000 and will mature in 7 years. If you req
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!