Income statement and balance sheet data for The Athletic Attic are provided below.

Required:
1. Calculate the following risk ratios for 2012 and 2013:
a. Receivables turnover ratio.
b. Inventory turnover ratio.
c. Current ratio.
d. Debt to equity ratio.
2. Calculate the following profitability ratios for 2012 and 2013:
a. Gross profit ratio.
b. Return on assets.
c. Profit margin.
d. Asset turnover.
3. Based on the ratios calculated, determine whether overall risk and profitability improved from 2012 to 2013.

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THE ATHLETIC ATTIC Income Statement For the years ended December 31 2013 2012 Sales revenue Cost of goods sold $10,400,000 6,800,000 3,600,000 $8,800,000 5,400,000 3,400,000 Gross profit Expenses: Operating expenses Depreciation expense Interest expense Income tax expense 1,600,000 200,000 40,000 400,000 2,240,000 $1,360,000 1,550,000 200,000 40,000 350,000 2,140,000 $1,260,000 Total expenses Net income THE ATHLETIC ATTIC Balance Sheet December 31 2013 2012 2011 Assets Current assets: Cash Accounts receivable Inventory Supplies $ 225,000 $ 154,000 204,000 990,000 1,725,000 130,000 740,000 1,355,000 100,000 760,000 1,025,000 75,000 Long-term assets: Equipment Less: Accumulated depreciation 1,100,000 (600,000) (400,000)(200,000) $3,570,000 $3,049,000 $2,964,000 1,100,000 1,100,000 Total assets Liabilities and Stockholders' Equit Current liabilities: Accounts payable Interest payable $ 175,000 4,000 40,000 105,000 S 81,000 4,000 30,000 35,000 500,000 600,000 Income tax payable Long-term liabilities: Notes payable Stockholders' equity: Common stock 500,000 500,000 600,000 1,809,000 1,749,000 Total liabilities and stockholders' equity $3,570,000 $3,049,000 $2,964,000 600,000 2,251,000 Retained earnings