Question

Income statement and balance sheet data for Great Adventures, Inc., are provided below.

GREAT ADVENTURES, INC. Income Statement For the Year Ended December 31, 2020
Revenues:
Service revenue (clinic, racing, TEAM)	$561,000
Sales revenue (MU watches)	136,000
Total revenues		$697,000
Expenses:
Cost of goods sold (MU watches)	79,000
Operating expenses	305,176
Depreciation expense	59,000
Interest expense	30,624
Income tax expense	62,400
Total expenses		536,200
Net income		$160,800

GREAT ADVENTURES, INC. Balance Sheets December 31, 2020 and 2019
		2020			2019	Increase (I) or Decrease (D)
Assets
Current assets:
Cash	$	319,498		$	147,000	172,498	(I)
Accounts receivable		58,500			44,000	14,500	(I)
Inventory		18,350			14,900	3,450	(I)
Other current assets		14,350			11,900	2,450	(I)
Long-term assets:
Land		600,000			0	600,000	(I)
Buildings		1,000,000			0	1,000,000	(I)
Equipment		74,000			74,000
Less: Accumulated depreciation		(86,500)			(27,500)	59,000	(I)
Total assets	$	1,998,198		$	264,300
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		$13,350			$9,900	3,450	(I)
Interest payable		840			840
Income tax payable		62,400			42,500	19,900	(I)
Long-term liabilities:
Notes payable		586,748			34,500	552,248	(I)
Stockholders' equity:
Common stock		120,000			20,000	100,000	(I)
Paid-in capital		1,105,500			0	1,105,500	(I)
Retained earnings		202,860			156,560	46,300	(I)
Treasury stock		(93,500)			0	(93,500)	(I)
Total liabilities and stockholders' equity	$	1,998,198		$	264,300
As you can tell from the financial statements, 2020 was an especially busy year. Tony and Suzie were able to use the $1.2 million received from the issuance of 100,000 shares of stock to hire a construction company for $1 million to build the cabins, dining facilities, ropes course, and the outdoor swimming pool. They even put in a baby pool to celebrate the birth of their firstborn son, little Venture Matheson. Assume all sales and services are on credit.

Calculate the following risk ratios for 2020. (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal places.)

	a. Receivables turnover ratio 13.60 times b. Average collection period 26.84 days c. Inventory turnover ratio 4.75 times d. Average days in inventory 76.81 days e. Current ratio to 1 f. Acid-test ratio to 1 g. Debt to equity ratio % h. Times interest earned ratio times

2. Calculate the following profitability ratios for 2020. (Round your answers to 2 decimal places.)

	a. Gross profit ratio (on the MU watches) % b. Return on assets % c. Profit margin % d. Asset turnover times e. Return on equity %

Answer 1