Cartwright's, a home-improvement store chain, reported these summarized figures: (Click the icon to view the income statement) Click the icon to view the balance shoota.) a. Compute the debt ratio at December 31, 2020 b. Is Cartwright's ability to pay its liabilities strong or weak? Explain your reasoning a. Compute the debt ratio at December 31, 2020, First identify the formula, then compute the debt ratio at December 31, 2020. (Round your answer to two decimal places.) Debt ratio A B 1 Cartwright's N Income Statement 2 3 For The Year Ended December 31, 2020 4 2020 5 Sales revenues $ 34,988,900 21,766,030 $ 13,222,870 6 Less: Cost of goods sold 7 Gross profit 8 Less: Operating expenses 9 Operating income 5,088,250 $ 8,134,620 10 Less: Interest expense 217,800 11 Income before income taxes $ 7,916,820 12 Less: Income tax expense 1,925,750 13 Net income $ 5,991,070 B 1 1 Cartwright's N Balance Sheets 3 December 31, 2020 and 2019 4 2020 2019 4 5 Assets 6 Current assets: 7 Cash $ 1,200,000 $ 810,000 260,000 203,200 8 Short-term investments 9 Accounts receivable 100,800 378,500 10 Inventory 4,676,000 4,190,000 11 Other current assets 409,500 12 . Total current assets $ 508,000 6,688,000 $ 11,437,000 6,048,000 13 Other noncurrent assets 11,620,000 17,668,000 14 Total assets $ 18,125,000 $ 15 16 Liabilities 17 Current liabilities: $ 3,400,000 $ 2,750,000 18 Accounts payable 19 Notes payable 20 Accrued liabilities 890,000 655.000 21 Total current liabilities $ $ 195,000 3,600,000 4,216,000 110,000 4,400,000 $ 4,300,000 8,700,000 $ 22 Long-term liabilities 23 Total liabilities $ 7,816,000 24 25 Stockholders' equity $ 2,502,000 $ 2,000,000 26 common stock, no par 27 Retained earnings 28 Total stockholders' equity 6,923,000 7,852,000 $ 9,425,000 $ 9,852,000 29 30 Total liabilities and equity $ 18,125,000 $ 17,668,000