Problem 12-6A Use ratios to analyze risk and profitability (LO12-3, 12-4) Skip to question [The following information applies to the questions displayed below.] 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 $ 3,460,000 $ 2,986,000 Cost of goods sold 2,470,000 1,940,000 Gross profit 990,000 1,046,000 Expenses: Operating expenses 945,000 848,000 Depreciation expense 20,000 22,000 Loss on sale of land 0 7,000 Interest expense 13,000 10,000 Income tax expense 7,000 43,000 Total expenses 985,000 930,000 Net income $ 5,000 $ 116,000 VIRTUAL GAMING SYSTEMS Balance Sheets December 31 2022 2021 2020 Assets Current assets: Cash $ 196,000 $ 176,000 $ 134,000 Accounts receivable 70,000 71,000 50,000 Inventory 120,000 95,000 125,000 Prepaid rent 13,000 11,000 4,800 Long-term assets: Investment in bonds 95,000 95,000 0 Land 290,000 200,000 230,000 Equipment 290,000 260,000 200,000 Less: Accumulated depreciation (74,000 ) (54,000 ) (32,000 ) Total assets $ 1,000,000 $ 854,000 $ 711,800 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 285,000 $ 56,000 $ 88,800 Interest payable 6,000 4,000 2,000 Income tax payable 11,000 10,000 13,000 Long-term liabilities: Notes payable 300,000 275,000 215,000 Stockholders' equity: Common stock 290,000 290,000 290,000 Retained earnings 108,000 219,000 103,000 Total liabilities and stockholders equity $ 1,000,000 $ 854,000 $ 711,800 Problem 12-6A Part 1 Required: 1. Calculate the following risk ratios for 2021 and 2022: (Round your answers to 1 decimal place.) 2021 2022 Receivables turnover ratio times times Inventory turnover ratio times times Current ratio to 1 to 1 Debt to equity ratio % %
