The following income statement and balance sheets for Virtua

The following income statement and balance sheets for Virtual Gaming Systems are provided VIRTUAL GAMING SYSTEMS Income Statement For the year ended December 31, 2018 Net sales Cost of goods sold $3,071,000 1,957,000 Gross profit 1,114,000 Expenses Operating expenses Depreciation expense Loss on sale of land Interest expense Income tax expense $865,000 30,500 8,700 18,500 55,000 Total expenses 977,700 Net income s 136,300 VIRTUAL GAMING SYSTEMS Balance Sheets December 31 2018 2017 Assets Current assets: Cash Accounts receivable Inventory $193,000 88,000 112,000 12.700 $151.000 67,000 142,000 6,840 epaid rent Long-term assets Investment in bonds Land Equipment Less: Accumulated depreciation 247,000 277,000 217000 (49,000) 112,000 217,000 (79,500) Total assets $932,200 $781,840 Liabilities and Stookholders Equity Current liabilities: Accounts payable Interest payable Income tax payable s 73,000$ 88,000 3,700 14,700 7,400 18,500 Long-term liabilities: Notes payable Stockholders\' equity 292.000 232000 Common stock Retained earnings 307,000 234,300 307,000 136,440 Total liabilities and stockholders\' equity $932,200 $781,840

Solution

Ratio Formula Calculation Answer Receivable Turnover Ratio Net Credit Sales / Average Accounts Receivable (3071000/((88000+67000)/2))              39.63 times Average Collection period 365/ Receivable Turnover Ratio (365/39.63)                 9.21 days Inventory Turnover Ratio Cost of Goods sold / Average Inventory (1957000/((112000+142000)/2)              15.41 times Average days in Inventory 365/ Inventory Turnover Ratio (365/15.41)              23.69 Days Current Ratio Current Assets/Current Liabilities (193000+88000+112000+12700)/(73000+7400+18500)                 4.10 to 1 Acide Test Ratio Cash + Account Receivable + Short Term Investments / Current Liabilities (193000+88000)/(73000+7400+18500)                 2.84 to 1 Debt to Equity Ratio Short Term Debt+ Long Term Debt / Shareholders\' Equity 292000/(307000+234300)              53.94 % Times Interest Earned Ratio EBIT/ Interest Expense (977000+55000+18500)/18500              56.78 times