Question

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

VIRTUAL GAMING SYSTEMS Income Statements For the year ended December 31
	2019	2018
Net sales	$3,560,000	$3,086,000
Cost of goods sold	2,490,000	1,960,000
Gross profit	1,070,000	1,126,000
Expenses:
Operating expenses	965,000	868,000
Depreciation expense	40,000	32,000
Loss on sale of land	0	9,000
Interest expense	23,000	20,000
Income tax expense	9,000	58,000
Total expenses	1,037,000	987,000
Net income	$    33,000	$   139,000

VIRTUAL GAMING SYSTEMS Balance Sheets December 31
	2019	2018	2017
Assets
Current assets:
Cash	$ 216,000	$196,000	$154,000
Accounts receivable	90,000	91,000	70,000
Inventory	140,000	115,000	145,000
Prepaid rent	15,000	13,000	7,200
Long-term assets:
Investment in bonds	115,000	115,000	0
Land	310,000	220,000	250,000
Equipment	310,000	280,000	220,000
Less: Accumulated depreciation	(124,000)	(84,000)	(52,000)
Total assets	$1,072,000	$946,000	$794,200
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$    161,000	$ 76,000	$91,000
Interest payable	12,000	8,000	4,000
Income tax payable	13,000	20,000	15,000
Long-term liabilities:
Notes payable	450,000	295,000	235,000
Stockholders' equity:
Common stock	310,000	310,000	310,000
Retained earnings	126,000	237,000	139,200
Total liabilities and stockholders’ equity	$1,072,000	$946,000	$794,200

Required:

1. Calculate the following risk ratios for 2018 and 2019: (Round your answers to 1 decimal place.)

Receivables turnover ratio,Inventory turnover ration, Current ration and Debt to equity ratio.

2. Calculate the following profitability ratios for 2018 and 2019: (Round your answers to 1 decimal place.)

Gross profit ratio, Return on assets, Profit margin and Asset turnover

Answer 1