You have just been hired as a financial analyst for Purple Power Company, a manufacturer of safety helmets. Your boss has asked you to perform a comprehensive analysis of the companys financial statements, including comparing Purple Powers performance to its major competitors. The companys financial statements for the last two years are as follows:

Purple Power Company Comparative Balance Sheet
	This Year	Last Year
Assets
Current Assets:
Cash	$960,000	$1,260,000
Marketable Securities	$0	$300,000
Accounts Receivable, Net	$2,700,000	$1,800,000
Inventory	$3,900,000	$2,400,000
Prepaid Expenses	$240,000	$180,000
Total Current Assets	$7,800,000	$5,940,000
Plant and Equipment, Net	$9,300,000	$8,940,000
Total Assets	$17,100,000	$14,880,000
Liabilities and Stockholders' Equity
Liabilities:
Current Liabilities	$3,900,000	$2,760,000
Note Payable, 10%	$3,600,000	$3,000,000
Total Liabilities	$7,500,000	$5,760,000
Stockholders' Equity:
Common Stock, $78 Par Value	$7,800,000	$7,800,000
Retained Earnings	$1,800,000	$1,320,000
Total Stockholders' Equity	$9,600,000	$9,120,000
Total Liabilities and Stockholders' Equity	$17,100,000	$14,880,000

Purple Power Company Comparative Income Statement and Reconciliation
	This Year	Last Year
Sales (All on Account)	$15,750,000	$12,480,000
Cost of Goods Sold	$12,600,000	$9,900,000
Gross Margin	$3,150,000	$2,580,000
Selling and Administrative Expenses	$1,590,000	$1,560,000
Net Operating Income	$1,560,000	$1,020,000
Interest Expense	$360,000	$300,000
Net Income Before Taxes	$1,200,000	$720,000
Income Taxes (30%)	$360,000	$216,000
Net Income	$840,000	$504,000
Common Dividends	$360,000	$252,000
Net Income Retained	$480,000	$252,000
Beginning Retained Earnings	$1,320,000	$1,068,000
Ending Retained Earnings	$1,800,000	$1,320,000

You gather the following financial data and ratios that are typical of companies in Purple Power Companys industry:

Current Ratio	2.3
Acid-Test Ratio	1.2
Average Collection Period	30 days
Average Sale Period	60 days
Return on Assets	9.5%
Debt-to-Equity Ratio	0.65
Times Interest Earned Ratio	5.7
Price-Earnings Ratio	10

1) Compute the times interest earned ratio for both this year and last year.

2) Compute the debt-to-equity ratio for both this year and last year.

3) Compute the gross margin percentage for both this year and last year.

4) Compute the return on total assets for both this year and last year. Total assets at the beginning of last year were $12,960,000.