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

Required:

1. Calculate the following risk ratios for 2021 and 2022:

a. Receivables turnover ratio.

b. Inventory turnover ratio.

c. Current ratio.

d. Debt to equity ratio.

2. Calculate the following profitability ratios for 2021 and 2022:

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 2021 to 2022.

THE ATHLETIC ATTIC Income Statements For the years ended December 31 2022 2021 Net sales $10,400,000 $8,900,000 Cost of goods sold 6,800,000 5,450,000 3,450,000 Gross profit 3,600,000 Expenses: Operating expenses Depreciation expense 1,600,000 1,600,000 200,000 210,000 Interest expense 40,000 50,000 Income tax expense 400,000 2,240,000 $ 1,360,000 360,000 Total expenses 2,220,000 $1,230,000 Net income