Question

Income statements and balance sheets data for Virtual Gaming Systems are provided below.

VIRTUAL GAMING SYSTEMS
Income Statements
For the years ended December 31
	2022				2021
Net sales	$	3,550,000			$	3,076,000
Cost of goods sold		2,488,000				1,958,000
Gross profit		1,062,000				1,118,000
Expenses:
Operating expenses		963,000				866,000
Depreciation expense		38,000				31,000
Loss on sale of land		0				8,800
Interest expense		22,000				19,000
Income tax expense		8,800				52,000
Total expenses		1,031,800				976,800
Net income	$	30,200			$	141,200

VIRTUAL GAMING SYSTEMS
Balance Sheets
December 31
	2022				2021				2020
Assets
Current assets:
Cash	$	213,000			$	194,000			$	152,000
Accounts receivable		87,000				89,000				68,000
Inventory		137,000				113,000				143,000
Prepaid rent		14,800				12,800				6,960
Long-term assets:
Investment in bonds		113,000				113,000				0
Land		308,000				218,000				248,000
Equipment		308,000				278,000				218,000
Less: Accumulated depreciation		(119,000	)			(81,000	)			(50,000	)
Total assets	$	1,061,800			$	936,800			$	785,960
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	125,400			$	74,000			$	132,360
Interest payable		11,400				7,600				3,800
Income tax payable		12,800				19,000				14,800
Long-term liabilities:
Notes payable		480,000				293,000				233,000
Stockholders' equity:
Common stock		308,000				308,000				308,000
Retained earnings		124,200				235,200				94,000
Total liabilities and stockholders’ equity	$	1,061,800			$	936,800			$	785,960

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

	2021		2022
Receivables Turnover Ratio		times		times
Inventory Turnover Ratio		times		times
Current Ratio		to 1		to 1
Debt to Equity Ratio		%		%

2. Calculate the following profitability ratios for 2021 and 2022

	2021		2022
Gross Profit Ratio		%		%
Return on Assets		%		%
Profit Margin		%		%
Asset turnover		times		times

Answer 1