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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 |
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| Sales revenue | $3,036,000 | |
| Cost of goods sold | 1,950,000 | |
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| 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 | |
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| Total expenses | 956,000 | |
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| Net income | $ 130,000 | |
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| VIRTUAL GAMING SYSTEMS Balance Sheet December 31 |
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| 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) |
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| Total assets | $900,000 | $753,000 |
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| 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 |
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| Total liabilities and stockholders’ equity | $900,000 | $753,000 |
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| Required: |
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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 | |