Problem 12-6A Use ratios to analyze risk and profitability (LO12-3, 12-4) [The following information applies to the questions displayed below.] 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 $3,560,000 $3,086,000 2,490,000 1,070,000 2021 Net sales Cost of goods sold Gross profit Expenses Operating expenses Depreciation expense 1,960,000 1,126,000 965,000 40,000 0 868,000 32,000 9,000 20,000 Loss on sale of land Interest expense 23,000 9,000 58,000 Income tax expense Total expenses 1,037,000 987,000 33,000 139,000 Net income VIRTUAL GAMING SYSTEMS Balance Sheets December 31 2022 2021 2020 Assets Current ass 216,000 90,000 140,000 15,000 Cash $196,000 91,000 115,000 13,000 $154,000 70,000 145,000 7,200 Accounts receivable Inventory Prepaid rent Long-term assets: Investment in bonds Land 115,000 310,000 310,000 115,000 220,000 280,000 0 250,000 220,000 Equipment Long-term assets: Investment in bonds 115,000 310,000 310,000 (124,000) 115,000 220,000 280,000 (84,000) 0 Land 250,000 220,000 (52,000) Equipment Less: Accumulated depreciation $1,072,000 $946,000 $794,200 Total assets Liabilities and Stockholders' Equity Current liabilities Accounts payable Interest payable Income tax payable Long-term 1iabilities Notes payable Stockholders' equity $ 161,000 $ 76,000 12,000 13,000 $91,000 4,000 15,000 8,000 20,000 450,000 295,000 235,000 310,000 126,000 310,000 237,000 310,000 139,200 Common stock Retained earnings $1,072,000 $946,000 $794,200 Total liabilities and stockholders' equity Problem 12-6A Part 1 Required: 1. Calculate the following risk ratios for 2021 and 2022: (Round your answers to 1 decimal place.) 2021 2022 times Receivables turnover ratio times Inventory turnover ratio Current ratio Debt to equity ratio times times to 1 to 1 % Problem 12-6A Use ratios to analyze risk and profitability (LO12-3, 12-4) [The following information applies to the questions displayed below] 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 2,490,000 1,070,000 $3,086,000 1,960,000 1,126,000 Cost of goods sold Gross profit Expenses: Operating expenses Depreciation expense 868,000 32,000 9,000 965,000 40,000 Loss on sale of land 0 Interest expense 20,000 58,000 987,000 23,000 9,000 1,037,000 33,000 139, 000 Income tax expense Total expenses Net income VIRTUAL GAMING SYSTEMS Balance Sheets December 31 2022 2021 2020 Assets Current assets Cash $154,000 70,000 216,000 90,000 140,000 15,000 $196,000 91,000 115,000 13,000 Accounts receivable 145,000 7,200 Inventory Prepaid rent Long-term assets: Investment in bonds 0 250,000 220,000 115,000 310,000 310,000 115,000 220,000 280,000 Land Equipment Frepaia rent Long-term assets: Investment in bonds Land Equipment Less: Accumulated depreciation 115,000 310,000 310,000 115,000 220,000 280,000 (84,000) 0 250,000 220,000 (52,000) (124,000) $794 , 200 $1,072,000 $946,000 Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Interest payable Income tax payable Long-term liabilities: Notes payable Stockholders' equity $ 161,000 12,000 13,000 $ 76,000 8,000 20,000 $ 91,000 4,000 15,000 295,000 235,000 450,000 310,000 310,000 310,000 Common stock Retained earnings 126,000 237,000 139,200 $1,072,000 $946,000 $794,200 Total liabilities and stockholders' equity Problem 12-6A Part 2 2. Calculate the following profitability ratios for 2021 and 2022: (Round your answers to 1 decimal place.) 2022 2021 Gross profit ratio Return on assets Profit margin % % % % % % Asset turnover times times