Problem 12-6B Use ratios to analyze risk and profitability (LO12-3, 12-4)

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

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

[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	$	12,780,000		$	11,350,000
Cost of goods sold		8,330,000			7,100,000
Gross profit		4,450,000			4,250,000
Expenses:
Operating expenses		1,770,000			1,720,000
Depreciation expense		200,000			200,000
Interest expense		57,000			57,000
Income tax expense		604,000			520,000
Total expenses		2,631,000			2,497,000
Net income	$	1,819,000		$	1,753,000

THE ATHLETIC ATTIC
Balance Sheets
December 31
		2022				2021				2020
Assets
Current assets:
Cash	$	242,000			$	172,000			$	238,000
Accounts receivable		1,007,000				757,000				777,000
Inventory		1,742,000				1,372,000				1,042,000
Supplies		147,000				117,000				92,000
Long-term assets:
Equipment		1,780,000				1,780,000				1,780,000
Less: Accumulated depreciation		(770,000	)			(570,000	)			(370,000	)
Total assets	$	4,148,000			$	3,628,000			$	3,559,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	224,300			$	157,000			$	147,300
Interest payable		5,700				0				5,700
Income tax payable		57,000				52,000				47,000
Long-term liabilities:
Notes payable		670,000				670,000				670,000
Stockholders' equity:
Common stock		770,000				770,000				770,000
Retained earnings		2,421,000				1,979,000				1,919,000
Total liabilities and stockholders equity	$	4,148,000			$	3,628,000			$	3,559,000

Problem 12-6B Part 1

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

	2021		2022
Receivables turnover ratio		times		times
Inventory turnover ratio		times		times
Current ratio		to 1		to 1
Debt to equity ratio		%		%

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

	2021		2022
Gross profit ratio		%		%
Return on assets		%		%
Profit margin		%		%
Asset turnover		times		times