2 PART QUESTION.

Problem 12-6A Use ratios to analyze risk and profitability (L012-3, 12-4) [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 $3,490,000 $3,016,000 Cost of goods sold 2,476,000 1,946,000 Gross profit 1,014,000 1,070,000 Expenses : Operating expenses 951,000 854,000 Depreciation expense 26,000 25,000 Loss on sale of land 7,600 Interest expense 16,000 13,000 Income tax expense 7,600 46,000 Total expenses 1,000,600 945, 600 Net income $ 13,400 $ 124,400 0 VIRTUAL GAMING SYSTEMS Balance Sheets December 31 2022 2021 2020 Assets Current assets: Cash Accounts receivable Inventory Prepaid rent Long-term assets: Investment in bonds Land Equipment Less: Accumulated depreciation Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Interest payable Income tax payable Long-term liabilities: Notes payable Stockholders' equity! Common stock Retained earnings Total liabilities and stockholders' equity $ 199,000 $182,000 $140,000 73,000 77,000 56,000 123,000 101,000 131,000 13,600 11,600 5,520 101,000 101,000 0 296,000 206,000 236,000 296,000 266,000 206,000 (89,000). (63, 000) (38,000) $1,012,600 $881,600 $736,520 $ 223,800 7,800 11,600 $ 62,000 5,200 13,000 281,000 296,000 224,400 $881,600 $103,320 2,600 13,600 221,000 360,000 296,000 113,400 $1,012,600 296,000 100,000 $736,520 Problem 12-6A Part 1 Required: 1. Calculate the following risk ratios for 2021 and 2022: (Round your answers to 1 decimal place.) 2021 times 2022 times times to 1 Receivables turnover ratio Inventory turnover ratio Current ratio Debt to equity ratio times to 1 % % Problem 12-6A Part 2 2. Calculate the following profitability ratios for 2021 and 2022: (Round your answers to 1 decimal place.) 2021 % 2022 % Gross profit ratio Retum on assets Profit margin % % % % Asset turnover times times