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Income statement and balance sheet data for Virtual Gaming Systems are provided below.
VIRTUAL GAMING SYSTEMS |
Income Statements |
For the years ended December 31 |
| 2022 | | 2021 |
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 | |
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VIRTUAL GAMING SYSTEMS |
Balance Sheets |
December 31 |
| 2022 | | 2021 | | 2020 | |
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 | | |
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Required: 1. Calculate the following risk ratios for 2021 and 2022: (Round your answers to 1 decimal place.)
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| | 2021 | 2022 | Receivables turnover ratio | | times | | times | Inventory turnover ratio | | times | | times | Current ratio | | to 1 | | to 1 | Debt to equity ratio | | % | | % | This is a numeric cell, so please enter numbers only. |
Answer & Explanation
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