Required information

Problem 12-6A 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
	2022				2021
Net sales	$	3,530,000			$	3,056,000
Cost of goods sold		2,484,000				1,954,000
Gross profit		1,046,000				1,102,000
Expenses:
Operating expenses		959,000				862,000
Depreciation expense		34,000				29,000
Loss on sale of land		0				8,400
Interest expense		20,000				17,000
Income tax expense		8,400				50,000
Total expenses		1,021,400				966,400
Net income	$	24,600			$	135,600

VIRTUAL GAMING SYSTEMS
Balance Sheets
December 31
	2022				2021				2020
Assets
Current assets:
Cash	$	207,000			$	190,000			$	148,000
Accounts receivable		81,000				85,000				64,000
Inventory		131,000				109,000				139,000
Prepaid rent		14,400				12,400				6,480
Long-term assets:
Investment in bonds		109,000				109,000				0
Land		304,000				214,000				244,000
Equipment		304,000				274,000				214,000
Less: Accumulated depreciation		(109,000	)			(75,000	)			(46,000	)
Total assets	$	1,041,400			$	918,400			$	769,480
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	154,200			$	70,000			$	122,680
Interest payable		10,200				6,800				3,400
Income tax payable		12,400				17,000				14,400
Long-term liabilities:
Notes payable		440,000				289,000				229,000
Stockholders' equity:
Common stock		304,000				304,000				304,000
Retained earnings		120,600				231,600				96,000
Total liabilities and stockholders equity	$	1,041,400			$	918,400			$	769,480

Problem 12-6A Part 1

Required:

1. Calculate the following risk ratios for 2021 and 2022: (Round your answers to 1 decimal place.)