Using the information for Sarot, Inc, in SE 4 and SE 5, compute the debt to equity ratio and the interest coverage ratio of 2011 and 2012. Comment on the results.

Sarot, Inc. Comparative Income Statements For the Years Ended December 31, 2012 and 2011 Net sales Cost of goods sold Gross margin Operating expenses Operating income Interest expense Income before income taxes Income taxes expense Net income Earnings per share 2012 720,000 448,000 $272,000 160,000 $112,000 28,000 $ 84,000 28,000 S 56,000 2011 $580,000 352,000 $228,000 120,000 $108,000 20,000 $ 88,000 32,000 56,000 Sarot, Inc. Comparative Balance Sheets December 31, 2012 and 2011 2012 2011 Assets $96,000 520,000 Current assets Property, plant, and equipment (net) Total assets 80,000 400,000 $616,000 $480,000 Llabllitles and Stockholders' Equity Current liabilities Long-term liabilities Stockholders equity Total liabilities and stockholders' equity 72,000 88,000 240,000 152,000 $616,000 $480,000 360,000 184,000