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Problem 12-6A Use ratios to analyze risk and profitability (LO12-3, 12-4)

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[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 % %

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