Year 2 Year 1 Income Statement Sales revenue $453,000 $447,000 Cost of goods sold 250,000 241,000 Gross profit 203,000 206,000 Operating expenses (including interest on bonds) 167,000 168,000 Pretax income 36,000 38,000 Income tax 10,800 11,400 Net income $ 25,200 $ 26,600 Balance Sheet Cash $ 6,800 Accounts receivable (net) 42,000 $ 3,900 29,000 Merchandise inventory 25,000 18,000 Prepaid expenses 200 100 Property and equipment (net) 130,000 120,000 Total assets $204,000 $171,000 Accounts payable $ 17,000 $ 18,000 Income taxes payable 1,000 1,000 Bonds payable (interest rate: 10%) 70,000 50,000 Common stock ($10 par value, 10,000 shares outstanding) 100,000 100,000 Retained earnings 16,000 2,000 Total liabilities and stockholders' equity $204,000 $171,000 Required: Interpret each element of the ratio analysis separately. Ensure accuracy by analyzing each ratio individually!