Required information 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 Net sales Cost of goods sold Gross profit Expenses: Operating expenses Depreciation expense Loss on sale of land Interest expense Income tax expense Total expenses Net income 2025 2024 $3,560,000 $3,086,000 2,490,000 1,960,000 1,070,000 1,126,000 965,000 868,000 40,000 32,000 0 9,000 23,000 20,000 9,000 53,000 1,037,000 982,000 33,000 144,000 VIRTUAL GAMING SYSTEMS Balance Sheets December 31 2025 2024 2023 Assets Current assets: Cash Accounts receivable Inventory Prepaid rent Long-term assets: Investment in bonds Land Equipment $216,000 90,000 $196,000 91,000 $154,000 70,000 140,000 115,000 145,000 15,000 13,000 7,200 115,000 115,000 0 310,000 220,000 250,000 310,000 280,000 220,000 Less: Accumulated depreciation (124,000) (84,000) (52,000) Total assets $1,072,000 $946,000 $794,200 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $111,000 $76,000 $137,200 Interest payable 12,000 Income tax payable 13,000 8,000 20,000 4,000 15,000 Long-term liabilities: Notes payable 500,000 295,000 235,000 Stockholders' equity: Common stock 310,000 310,000 310,000 Retained earnings 126,000 237,000 93,000 Total liabilities and stockholders' equity $1,072,000 $946,000 $794,200 Problem 12-6A (Algo) Part 1 Required: 1. Assuming that all sales were on account, calculate the following risk ratios for 2024 and 2025: (Round your answers to 1 decimal place.) Receivables turnover ratio Inventory turnover ratio Current ratio Debt to equity ratio 2024 2025 times times times times % % Problem 12-6A (Algo) Part 2 2. Calculate the following profitability ratios for 2024 and 2025: (Round your answers to 1 decimal place.) 2024 2025 Gross profit ratio % % Return on assets % % Profit margin % % Asset turnover times times