Income statement and balance sheet data for Virtual Gaming Systems are provided
ID: 2367934 • Letter: I
Question
Income statement and balance sheet data for Virtual Gaming Systems are provided below. VIRTUAL GAMING SYSTEMS Income Statement For the year ended December 31 2013 2012 Sales revenue $3,510,000 $3,036,000 Cost of goods sold 2,480,000 1,950,000 Gross profit 1,030,000 1,086,000 Expenses: Operating expenses 955,000 858,000 Depreciation expense 30,000 27,000 Loss on sale of land 0 8,000 Interest expense 18,000 15,000 Income tax expense 8,000 48,000 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total expenses 1,011,000 956,000 Net income $ 19,000 $ 130,000 VIRTUAL GAMING SYSTEMS Balance Sheet December 31 2013 2012 2011 Assets Current assets: Cash $ 201,000 $186,000 $144,000 Accounts receivable 75,000 81,000 60,000 Inventory 125,000 105,000 135,000 Prepaid rent 14,000 12,000 6,000 Long-term assets: Investment in bonds 105,000 105,000 0 Land 300,000 210,000 240,000 Equipment 300,000 270,000 210,000 Less: Accumulated depreciation (99,000) (69,000) (42,000) Total assets $1,021,000 $900,000 $753,000 -------------------------------------------------------------------------------- Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 78,000 $ 66,000 $ 81,000 Interest payable 9,000 6,000 3,000 Income tax payable 12,000 15,000 14,000 Long-term liabilities: Notes payable 400,000 285,000 225,000 Stockholders' equity: Common stock 300,000 300,000 300,000 Retained earnings 222,000 228,000 130,000 Total liabilities and stockholdersExplanation / Answer
receivable turnover ratio= accounts payable/(avg accounts recievable) 2012: receivable turnover ratio = Accounts payable/(avg Accounts receivable) = 66000/((60000+81000)/2) = 44/47 = 0.936 inventory ratio = cost of goods/(avg inventory) = 1950000/((105000+135000)/2) = 65/4 = 16.25 Current ratio = current asstes/current liabilities = 186000/(66000+15000+6000) = 62/29 = 2.137 Gross profit ratio = gross profit / sales revenue = 1086000/3036000 = 181/506 = 0.357 Return on assets = profit before tax / (avg total assets) = (1,086,000-27,000)/((900,000 +753,000)/2) = 706/551 Profit margin = (gross profit-depreciation-operating expenses)/sales revenue = (1086000-27000-858000)/3036000 = 0.0662 Asset turnover = sales revenue / (avg total assets) = 3,036,000/((900000+753000)/2) = 2024/551 = 3.67 avg total assets (2012)=(total assets (2011)+total assets (2012))/2 avg Accounts receivable = (Accounts receivable (2011)+Accounts receivable (2012))/2 avg inventory = (inventory (2011)+inventory (2012))/2 similarly calculate for 2013