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Problem 12-6B Use ratios to analyze risk and profitability (L012-3, 12-4) [The following information applies to the questions displayed below.] Income statement and balance sheet data for The Athletic Attic are provided below. THE ATHLETIC ATTIC Income Statements For the years ended December 31 2022 2021 Net sales $10,960,000 $9,400,000 Cost of goods sold 7,160,000 5,800,000 Gross profit 3,800,000 3,600,000 Expenses: Operating expenses 1,640,000 1,590,000 Depreciation expense 200,000 200,000 Interest expense 44,000 44,000 Income tax expense 448,000 390,000 Total expenses 2,332,000 2,224,000 Net income $ 1,468,000 $1,376,000 THE ATHLETIC ATTIC Balance Sheets December 31 2022 2021 2820 Assets Current assets: Cash $ 229,000 $ 158,000 $ 212, obe Accounts receivable 994,000 744,000 764,000 Inventory 1,729,000 1,359,000 1,029, ebe Supplies 134,000 104,000 79,000 Long-term assets: Equipment 1,260,000 1,260,000 1,260,000 Less: Accumulated depreciation (640,000) (440,000) (248, ebe) Total assets $3,706,000 $3,185,000 $3,184,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 186,600 $ 117,000 $ 96,60 Interest payable 4,400 4,400 Income tax payable 44,000 39,000 34, ebe Long-term liabilities: Notes payable 540,000 Stockholders' equity: 540,000 548, ebe Common stock 640,000 640,000 648, obe Retained earnings 2,291, eee 1,849,000 1.789,000 Total liabilities and stockholders' equity $3,706,000 $3,185,000 $3,184,000 Required: 1. Calculate the following risk ratios for 2021 and 2022: (Round your answers to 1 decimal place.) Answer is complete but not entirely correct. Receivables turnover ratio Inventory turnover ratio Current ratio Debt to equity ratio 2021 12.5 times 7.9X times 15.2 to 1 27.0 X 1% 2022 12.6 times 7.1 times 13.1 to 1 26.5 % 2. Calculate the following profitability ratios for 2021 and 2022: (Round your answers to 1 decimal place.) Answer is complete but not entirely correct. 34.7 Gross profit ratio Return on assets Profit margin Asset tumover 2021 38.3 % 43.2 x % 14.6 % 2022 % 39.6 % % 13.4 % 3.0 times 3.2 times

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