Problem 12-6B Use ratios to analyze risk and profitability (LO12-3, 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 ATTICIncome StatementsFor the years ended December 3120222021Net sales$10,400,000$8,800,000Cost of goods sold6,800,0005,400,000Gross profit3,600,0003,400,000Expenses:Operating expenses1,600,0001,550,000Depreciation expense200,000200,000Interest expense40,00040,000Income tax expense400,000350,000Total expenses2,240,0002,140,000Net income$1,360,000$1,260,000

THE ATHLETIC ATTICBalance SheetsDecember 31202220212020AssetsCurrent assets:Cash$225,000$154,000$204,000Accounts receivable990,000740,000760,000Inventory1,725,0001,355,0001,025,000Supplies130,000100,00075,000Long-term assets:Equipment1,100,0001,100,0001,100,000Less: Accumulated depreciation(600,000)(400,000)(200,000)Total assets$3,570,000$3,049,000$2,964,000Liabilities and Stockholders' EquityCurrent liabilities:Accounts payable$175,000$105,000$81,000Interest payable4,00004,000Income tax payable40,00035,00030,000Long-term liabilities:Notes payable500,000500,000500,000Stockholders' equity:Common stock600,000600,000600,000Retained earnings2,251,0001,809,0001,749,000Total liabilities and stockholders' equity$3,570,000$3,049,000$2,964,000

Problem 12-6B Part 1

Required:

1.Calculate the following risk ratios for 2021 and 2022:(Round your answers to 1 decimal place.)