Income statement and balance sheet data for The Athletic Attic are provided below.

Required:
1. Calculate the following risk ratios for 2012 and 2013:
a. Receivables turnover ratio.
b. Inventory turnover ratio.
c. Current ratio.
d. Debt to equity ratio.
2. Calculate the following profitability ratios for 2012 and 2013:
a. Gross profit ratio.
b. Return on assets.
c. Profit margin.
d. Asset turnover.
3. Based on the ratios calculated, determine whether overall risk and profitability improved from 2012 to 2013.

THE ATHLETIC ATTIC Income Statement For the years ended December 31 2013 2012 Sales revenue Cost of goods sold $10,400,000 6,800,000 3,600,000 $8,800,000 5,400,000 3,400,000 Gross profit Expenses: Operating expenses Depreciation expense Interest expense Income tax expense 1,600,000 200,000 40,000 400,000 2,240,000 $1,360,000 1,550,000 200,000 40,000 350,000 2,140,000 $1,260,000 Total expenses Net income THE ATHLETIC ATTIC Balance Sheet December 31 2013 2012 2011 Assets Current assets: Cash Accounts receivable Inventory Supplies $ 225,000 $ 154,000 204,000 990,000 1,725,000 130,000 740,000 1,355,000 100,000 760,000 1,025,000 75,000 Long-term assets: Equipment Less: Accumulated depreciation 1,100,000 (600,000) (400,000)(200,000) $3,570,000 $3,049,000 $2,964,000 1,100,000 1,100,000 Total assets Liabilities and Stockholders' Equit Current liabilities: Accounts payable Interest payable $ 175,000 4,000 40,000 105,000 S 81,000 4,000 30,000 35,000 500,000 600,000 Income tax payable Long-term liabilities: Notes payable Stockholders' equity: Common stock 500,000 500,000 600,000 1,809,000 1,749,000 Total liabilities and stockholders' equity $3,570,000 $3,049,000 $2,964,000 600,000 2,251,000 Retained earnings