Required:1. Assuming that all sales were on account, calculate the following risk ratios for 2024 and 2025: (Round your answers to 1 decimalplace.)20242025Receivables turnover ratiotimestimes|Inventory turnover ratiotimestimesCurrent ratioDebt to equity ratio%% VIRTUAL GAMING SYSTEMSIncome StatementsFor the Years Ended December 3120252024$3,460,0002,470,000990,000$2,986,0001,940,0001,046,000Net salesCost of goods soldGross profitExpenses:Operating expensesDepreciation expenseLoss on sale of landInterest expenseIncome tax expenseTotal expenses848,00022,0007,00010,00043,000930,000945,00020,00013,0007,000985,000Net income5,000116,000VIRTUAL GAMING SYSTEMSBalance SheetsDecember 31202520242023AssetsCurrent assets:Cash$196,00070,000120,00013,000$176,00071,00095,00011,000$134,00050,000125,0004,800Accounts receivableInventoryPrepaid rentLong-term assets:Investment in bondsLand95,000290,000290,000(74,000)$1,000,00095,000200,000260,000(54,000)$854,000230,000200,000(32,000)$711,800EquipmentLess: Accumulated depreciationTotal assetsLiabilities and Stockholders' EquityCurrent liabilities:Accounts payableInterest payableIncome tax payableLong-term liabilities:Notes payableStockholders' equity:Common stockRetained earnings$285,0006,00011,000$56,0004,00010,000$88,8002,00013,000300,000275,000215,000290,000108,000$1,000,000290,000219,000$854,000290,000103,000$711,800Total liabilities and stockholders' equity

Receivable Turnover Ratio: It measures how efficient the firm is in the collection of receivables…

Answered: Required: 1. Assuming that all sales…

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.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

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.)
2024
2025
Receivables turnover ratio
times
times
|Inventory turnover ratio
times
times
Current ratio
Debt to equity ratio
%
%

VIRTUAL GAMING SYSTEMS
Income Statements
For the Years Ended December 31
2025
2024
$3,460,000
2,470,000
990,000
$2,986,000
1,940,000
1,046,000
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
848,000
22,000
7,000
10,000
43,000
930,000
945,000
20,000
13,000
7,000
985,000
Net income
5,000
116,000
VIRTUAL GAMING SYSTEMS
Balance Sheets
December 31
2025
2024
2023
Assets
Current assets:
Cash
$196,000
70,000
120,000
13,000
$176,000
71,000
95,000
11,000
$134,000
50,000
125,000
4,800
Accounts receivable
Inventory
Prepaid rent
Long-term assets:
Investment in bonds
Land
95,000
290,000
290,000
(74,000)
$1,000,000
95,000
200,000
260,000
(54,000)
$854,000
230,000
200,000
(32,000)
$711,800
Equipment
Less: Accumulated depreciation
Total assets
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
Interest payable
Income tax payable
Long-term liabilities:
Notes payable
Stockholders' equity:
Common stock
Retained earnings
$285,000
6,000
11,000
$56,000
4,000
10,000
$88,800
2,000
13,000
300,000
275,000
215,000
290,000
108,000
$1,000,000
290,000
219,000
$854,000
290,000
103,000
$711,800
Total liabilities and stockholders' equity

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