Problem 12-6A (Algo) Use ratios to analyze risk and profitability (LO12-3, 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
	2025	2024
Net sales	$3,495,000	$3,021,000
Cost of goods sold	2,477,000	1,947,000
Gross profit	1,018,000	1,074,000
Expenses:
Operating expenses	952,000	855,000
Depreciation expense	27,000	25,500
Loss on sale of land	0	7,700
Interest expense	16,500	13,500
Income tax expense	7,700	46,500
Total expenses	1,003,200	948,200
Net income	14,800	125,800

VIRTUAL GAMING SYSTEMS
Balance Sheets
December 31
	2025	2024	2023
Assets
Current assets:
Cash	$199,500	$183,000	$141,000
Accounts receivable	73,500	78,000	57,000
Inventory	123,500	102,000	132,000
Prepaid rent	13,700	11,700	5,640
Long-term assets:
Investment in bonds	102,000	102,000	0
Land	297,000	207,000	237,000
Equipment	297,000	267,000	207,000
Less: Accumulated depreciation	(91,500)	(64,500)	(39,000)
Total assets	$1,014,700	$886,200	$740,640
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$213,600	$63,000	$105,740
Interest payable	8,100	5,400	2,700
Income tax payable	11,700	13,500	13,700
Long-term liabilities:
Notes payable	370,000	282,000	222,000
Stockholders' equity:
Common stock	297,000	297,000	297,000
Retained earnings	114,300	225,300	99,500
Total liabilities and stockholders equity	$1,014,700	$886,200	$740,640

2. Calculate the following profitability ratios for 2024 and 2025: (Round your answers to 1 decimal place.)