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

Required:

1. Calculate the following risk ratios for 2021 and 2022:

a. Receivables turnover ratio.

b. Inventory turnover ratio.

c. Current ratio.

d. Debt to equity ratio.

2. Calculate the following profitability ratios for 2021 and 2022:

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 2021 to 2022.

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THE ATHLETIC ATTIC Income Statements For the years ended December 31 2022 2021 Net sales $10,400,000 $8,900,000 Cost of goods sold 6,800,000 5,450,000 3,450,000 Gross profit 3,600,000 Expenses: Operating expenses Depreciation expense 1,600,000 1,600,000 200,000 210,000 Interest expense 40,000 50,000 Income tax expense 400,000 2,240,000 $ 1,360,000 360,000 Total expenses 2,220,000 $1,230,000 Net income