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3. H,O Corporation is a wholesaler of scuba gear. During 2004, H,O expanded its retail business by adding over 50 dive shops. The following information is obtained from the comparative financial statements included in the company's 2004 annual report (all amounts are in thousands): Total liabilities Total stockholders' equity Total assets Dec 31, 2004 $55,000 35,000 90,000 Dec 31, 2003 $24,000 22,000 46,000 FOR THE FISCAL YEARS ENDED Net Sales Gross Margin Depreciation expense Interest expense Income tax expense Net income Dec. 31 2004 $175,000 $90,000 $20,000 11,000 25,000 34,000 2003 $123,000 $37,000 $ 6,000 4,000 15,000 12,000 1. Using the information provided above, compute the following for 2004 and 2003: A Debt Ratio 2004 2003 B. Times interest earned ratio 2004 2003 2. Comment briefly on the company's solvency between 2003 and 2004 based on your ratio calculations in part 1 Income tax expense 25,000 15.000 Net income 34.000 12,000 1. Using the information provided above, compute the following for 2004 and 2003: A Debt Ratio 2003 2004 . Times interest earned ratio 2004 2003 2. Comment briefly on the company's solvency between 2003 and 2004 based on your ratio calculations in part 1. 3. Using the information provided above, compute the following for the years indicated below A Profit Margin 2004 B. Return on Assets 2004

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