Using the information for Sarot, Inc., in SE 4 and SE 5, compute the debt to equity ratio and the interest coverage ratio for 2009 and 2010. Comment on the results. (Round computations to one decimal place.)

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Sarot, Inc. Comparative Income Statements For the Years Ended December 31, 2010 and 2009 2010 2009 Net sales $720,000 448,000 $272,000 160,000 $112,000 28,000 $ 84,000 28,000 $ 56,000 $580,000 352,000 $228,000 120,000 $108,000 20,000 $ 88,000 32,000 $ 56,000 2.80 Cost of goods sold Gross margin Operating expenses Operating income Interest expense Income before income taxes Income taxes expense Net income Earnings per share 2.80 Sarot, Inc. Comparative Balance Sheets December 31, 2010 and 2009 2010 2009 Assets $ 96,000 520,000 $616,000 $ 80,000 400,000 $480,000 Current assets Property, plant, and equipment (net) Total assets Liabilities and Stockholders' Equity $ 72,000 360,000 184,000 Total liabilities and stockholders' equity $616,000 $ 88,000 240,000 152,000 $480,000 Current liabilities Long-term liabilities Stockholders' equity