Question

GREAT ADVENTURES, INC.
Income Statement
For the Year Ended December 31, 2020

  Revenues:

     Service revenue (clinic, racing, TEAM)

$535,000

     Sales revenue (MU watches)

110,000

        Total revenues

$645,000

  Expenses:

     Cost of goods sold (MU watches)

66,000

     Operating expenses

303,876

     Depreciation expense

46,000

     Interest expense

29,324

     Income tax expense

54,600

        Total expenses

499,800

  Net income

$145,200

Assets
Current assets:
Cash	$	298,404		$	134,000	164,404	(I)
Accounts receivable		39,000			31,000	8,000	(I)
Inventory		16,400			13,600	2,800	(I)
Other current assets		12,400			10,600	1,800	(I)
Long-term assets:
Land		250,000			0	250,000	(I)
Buildings		1,200,000			0	1,200,000	(I)
Equipment		61,000			61,000
Less: Accumulated depreciation		(70,250)			(24,250)	46,000	(I)
Total assets	$	1,806,954		$	225,950
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		$11,400			$8,600	2,800	(I)
Interest payable		710			710
Income tax payable		54,600			36,000	18,600	(I)
Long-term liabilities:
Notes payable		450,404			28,000	422,404	(I)
Stockholders' equity:
Common stock		130,000			30,000	100,000	(I)
Paid-in capital		1,106,000			0	1,106,000	(I)
Retained earnings		143,840			122,640	21,200	(I)
Treasury stock		(90,000)			0	(90,000)	(I)
Total liabilities and stockholders' equity	$	1,806,954		$	225,950

1. Calculate the following risk ratios for 2020.

Use 365 days in a year.

Round answers to 2 decimal places.

a.	Receivables turnover ratio		times
b.	Average collection period		days
c.	Inventory turnover ratio		times
d.	Average days in inventory		days
e.	Current ratio		to 1
f.	Acid-test ratio		to 1
g.	Debt to equity ratio		%
h.	Times interest earned ratio		times

Answer 1