Income statement and balance sheet data for Virtual Gaming Systems are provided below.

Required:

1. Calculate the following risk ratios for 2012 and 2013:

a. Receivables turnover ratio.

b. Inventory turnover ratio.

c. Current ratio.

d. Debt to equity ratio.

2. Calculate the following profitability ratios for 2012 and 2013:

a. Gross profit ratio.

b. Return on assets.

c. Profit margin.

d. Asset turnover.

3. Based on the ratios calculated, determine whether overall risk and profitability improved from 2012 to 2013.

VIRTUAL GAMING SYSTEMS Income Statement For the year ended December 31 2013 2012 Sales revenue Cost of goods sold $3,510,000 2,480,000 1,030,000 $3,036,000 1950,000 1,086,000 Gross profit Operating expenses 955,000 30,000 858,000 27,000 8,000 15,000 48,000 956,000 S 130,000 Loss on sale of land Interest expense Income tax expense 18,000 8,000 1,011,000 S 19,000 Total expenses Net income VIRTUAL GAMING SYSTEMS Balance Sheet December 31 2011 Accounts receivable assets: Investment in bonds Less: Accumulated depreciation (99,000) (69,000)(42,000) Liabilities and Stockholders' E 3,000 Long-term liabilities: Retained earnings Total liabilities and stockholders' equity $1,021,000 900,000 $753,000