Income statement and balance sheet data for Virtual Gaming Systems are provided below.

Required:

1. Calculate the following risk ratios for 2012 and 2013:

a. Receivables turnover ratio.

b. Inventory turnover ratio.

c. Current ratio.

d. Debt to equity ratio.

2. Calculate the following profitability ratios for 2012 and 2013:

a. Gross profit ratio.

b. Return on assets.

c. Profit margin.

d. Asset turnover.

3. Based on the ratios calculated, determine whether overall risk and profitability improved from 2012 to 2013.

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VIRTUAL GAMING SYSTEMS Income Statement For the year ended December 31 2013 2012 Sales revenue Cost of goods sold $3,510,000 2,480,000 1,030,000 $3,036,000 1950,000 1,086,000 Gross profit Operating expenses 955,000 30,000 858,000 27,000 8,000 15,000 48,000 956,000 S 130,000 Loss on sale of land Interest expense Income tax expense 18,000 8,000 1,011,000 S 19,000 Total expenses Net income VIRTUAL GAMING SYSTEMS Balance Sheet December 31 2011 Accounts receivable assets: Investment in bonds Less: Accumulated depreciation (99,000) (69,000)(42,000) Liabilities and Stockholders' E 3,000 Long-term liabilities: Retained earnings Total liabilities and stockholders' equity $1,021,000 900,000 $753,000