Problem 12-6B Use ratios to analyze risk and profitability (L012-3, 12-4) (The following information applies to the questions displayed below.) Income statement and balance sheet data for The Athletic Attic are provided below. THE ATHLETIC ATTIC Income Statements For the years ended December 31 2022 2021 Net sales $11,520,000 $10,000,000 Cost of goods sold 7,520,000 6,200,000 Gross profit 4,000,000 3,800,000 Expenses: Operating expenses 1,680,000 1,630,000 Depreciation expense 200,000 200,000 Interest expense 48,000 48,000 Income tax expense 496,000 430,000 Total expenses 2,424,000 2,308,000 Net income $ 1,576,000 $ 1,492,000 THE ATHLETIC ATTIC Balance Sheets December 31 2022 2021 2020 Assets Current assets: Cash Accounts receivable Inventory Supplies Long-term assets: Equipment Less: Accumulated depreciation Total assets $ 233,000 998,000 1,733,000 138,000 $ 162,000 748,000 1,363,000 108,000 $ 220,000 768,000 1,033,000 83,000 1,420,000 (680,000) $3,842,000 1,420,000 (480,000) $3,321,000 1,420,000 (280,000) $3,244,000 $ $ 129,000 $ 198,200 4,800 48,000 112,200 4,800 38,000 43,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Interest payable Income tax payable Long-term liabilities: Notes payable Stockholders' equity: Common stock Retained earnings Total liabilities and stockholders' equity 580,000 580,000 580,000 680,000 2,331,000 $ 3,842,000 680,000 1,889,000 $3,321,000 680,000 1,829,000 $3,244,000 Problem 12-6B Part 1 Required: 1. Calculate the following risk ratios for 2021 and 2022: (Round your answers to 1 decimal place.) Answer is complete but not entirely correct. 2021 2022 14.8 X times 3.3 X times Receivables turnover ratio Inventory turnover ratio Current ratio Debt to equity ratio 1.3 X 13.8 22.6 X times to 1 % 1.2 x 12.4 19.3 times to 1 % Problem 12-6B Part 2 2. Calculate the following profitability ratios for 2021 and 2022: (Round your answers to 1 decimal place.) X Answer is complete but not entirely correct. Gross profit ratio Return on assets Profit margin 2021 38.0 % 11.0 X % 15.0 % 0.8 X times 2022 35.0 X % 11.0 X % 14.0 X % 0.8 X times Asset turnover