Assuming that all sales were on account, calculate the following risk ratios for 2024. Risk Ratios1. Receivables turnover ratio 38.3 times2. Average collection period 9.5 days3. Inventory turnover ratio 15.1 times4. Average days in inventory 24.2 days5. Current ratio 4.0 6. Acid-test ratio ? 7. Debt to equity ratio ? %8. Times interest earned ratio ? times Problem 12-4A (Static) Calculate risk ratios (LO12-3)The following income statement and balance sheets for Virtual Gaming Systems are provided.Net salesCost of goods soldGross profitExpenses:VIRTUAL GAMING SYSTEMSIncome StatementFor the Year Ended December 31, 2024Net incomeOperating expensesDepreciation expenseLoss on sale of landInterest expenseIncome tax expenseTotal expenses$ 868,00032,0009,00020,00058,000$ 3,086,0001,960,0001,126,000987,000$ 139,000 AssetsCurrent assets:CashAccounts receivableInventoryPrepaid rentLong-term assets:Investment in bondsLandEquipmentLess:cumulated depreciationVIRTUAL GAMING SYSTEMSAccounts payableInterest payableTotal assetsLiabilities and Stockholders' EquityCurrent liabilities:Income tax payableLong-term liabilities:Notes payableBalance SheetsDecember 31Stockholders' equity:Common stockRetained earningsTotal liabilities and stockholders' equity2024$ 196,00091,000115,00013,000115,000220,000280,000(84,000)$ 946,000$ 76,0008,00020,000295,000310,000237,000$ 946,0002023$ 154,00070,000145,0007,2000250,000220,000(52,000)$ 794,200$ 91,0004,00015,000235,000310,000139,200$ 794,200

Ratio analysis helps to analyze the financial statements of the company. The management can take…

Answered: Problem 12-4A (Static) Calculate risk…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assuming that all sales were on account, calculate the following risk ratios for 2024.

Risk Ratios
1. Receivables turnover ratio 38.3 times
2. Average collection period 9.5 days
3. Inventory turnover ratio 15.1 times
4. Average days in inventory 24.2 days
5. Current ratio 4.0
6. Acid-test ratio ?
7. Debt to equity ratio ? %
8. Times interest earned ratio ? times

Problem 12-4A (Static) Calculate risk ratios (LO12-3)
The following income statement and balance sheets for Virtual Gaming Systems are provided.
Net sales
Cost of goods sold
Gross profit
Expenses:
VIRTUAL GAMING SYSTEMS
Income Statement
For the Year Ended December 31, 2024
Net income
Operating expenses
Depreciation expense
Loss on sale of land
Interest expense
Income tax expense
Total expenses
$ 868,000
32,000
9,000
20,000
58,000
$ 3,086,000
1,960,000
1,126,000
987,000
$ 139,000

Assets
Current assets:
Cash
Accounts receivable
Inventory
Prepaid rent
Long-term assets:
Investment in bonds
Land
Equipment
Less:
cumulated depreciation
VIRTUAL GAMING SYSTEMS
Accounts payable
Interest payable
Total assets
Liabilities and Stockholders' Equity
Current liabilities:
Income tax payable
Long-term liabilities:
Notes payable
Balance Sheets
December 31
Stockholders' equity:
Common stock
Retained earnings
Total liabilities and stockholders' equity
2024
$ 196,000
91,000
115,000
13,000
115,000
220,000
280,000
(84,000)
$ 946,000
$ 76,000
8,000
20,000
295,000
310,000
237,000
$ 946,000
2023
$ 154,000
70,000
145,000
7,200
0
250,000
220,000
(52,000)
$ 794,200
$ 91,000
4,000
15,000
235,000
310,000
139,200
$ 794,200

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