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

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

VIRTUAL GAMING SYSTEMS

Income Statements

For the Years Ended December $31$

$20252024$

Net sales $$3,485,000$ $$3,011,000$

Cost of goods sold $2,475,0001,945,000$

Gross profit $1,010,0001,066,000$

Expenses:

Operating expenses $950,000853,000$

Depreciation expense $25,00024,500$

Loss on sale of land $07,500$

Interest expense $15,50012,500$

Income tax expense $7,50045,500$

Total expenses $998,000943,000$

Net income $12,000123,000$

VIRTUAL GAMING SYSTEMS

Balance Sheets

December $31$

$202520242023$

Assets

Current assets:

Cash $$198,500$ $$181,000$ $$139,000$

Accounts receivable $72,50076,00055,000$

Inventory $122,500100,000130,000$

Prepaid rent $13,50011,5005,400$

Long$-$term assets:

Investment in bonds $100,000100,0000$

Land $295,000205,000235,000$

Equipment $295,000265,000205,000$

Less: Accumulated depreciation $(86,500)(61,500)(37,000)$

Total assets $$1,010,500$ $$877,000$ $$732,400$

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $$234,000$ $$61,000$ $$100,900$

Interest payable $7,5005,0002,500$

Income tax payable $11,50012,50013,500$

Long$-$term liabilities:

Notes payable $350,000280,000220,000$

Stockholders' equity:

Common stock $295,000295,000295,000$

Retained earnings $112,500223,500100,500$

Total liabilities and stockholders$$ equity $$1,010,500$ $$877,000$ $$732,400$Calculate the following profitability ratios for $2024$ and $2025$: $($Round your answers to $1$ decimal place.$)$