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The following income statement and balance sheet for Virtual Gaming Systems are provided.

VIRTUAL GAMING SYSTEMS
Income Statement
For the year ended December 31, 2012
Sales revenue
$3,036,000
Cost of goods sold
1,950,000


Gross profit
1,086,000
Expenses

Operating expenses 858,000
Depreciation expense 27,000
Loss on sale of land 8,000
Interest expense 15,000
Income tax expense 48,000


Total expenses
956,000


Net income
$ 130,000



VIRTUAL GAMING SYSTEMS
Balance Sheet
December 31

2012 2011
Assets

Current assets:

Cash $186,000 $144,000
Accounts receivable 81,000 60,000
Inventory 105,000 135,000
Prepaid rent 12,000 6,000
Long-term assets:

Investment in bonds 105,000 0
Land 210,000 240,000
Equipment 270,000 210,000
Less: Accumulated depreciation (69,000) (42,000)

Total assets $900,000 $753,000

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $ 66,000 $ 81,000
Interest payable 6,000 3,000
Income tax payable 15,000 14,000
Long-term liabilities:

Notes payable 285,000 225,000
Stockholders' equity:

Common stock 300,000 300,000
Retained earnings 228,000 130,000

Total liabilities and stockholders' equity $900,000 $753,000

Required:

Assuming that all sales were on account, calculate the following risk ratios for 2012. (Round your intermediate and final answers to 1 decimal place. Omit the "%" sign in your response)

Risk Ratios
1. Receivables turnover ratio
times
2. Average collection period
days
3. Inventory turnover ratio
times
4. Average days in inventory
days
5. Current ratio
to 1
6. Acid-test ratio
to 1
7. Debt to equity ratio
%
8. Times interest earned ratio
times

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M9359159

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