The following income statement and balance sheets for Virtual Gaming Systems are provided.

VIRTUAL GAMING SYSTEMS
Income Statement
For the year ended December 31, 2021
Net sales $3,086,000
Cost of goods sold 1,960,000
Gross profit 1,126,000
Expenses:
Operating expenses $ 868,000
Depreciation expense 32,000
Loss on sale of land 9,000
Interest expense 20,000
Income tax expense 58,000
Total expenses 987,000
Net income $139,000

VIRTUAL GAMING SYSTEMS
Balance Sheets
December 31
2018 2017
Assets
Current assets:
Cash $196,000 $154,000
Accounts receivable 91,000 70,000
Inventory 115,000 145,000
Prepaid rent 13,000 7,200
Long-term assets:
Investment in bonds 115,000 0
Land 220,000 250,000
Equipment 280,000 220,000
Less: Accumulated depreciation (84,000) (52,000)
Total assets $946,000 $794,200
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $76,000 $91,000
Interest payable 8,000 4,000
Income tax payable 20,000 15,000
Long-term liabilities:
Notes payable 295,000 235,000
Stockholders' equity:
Common stock 310,000 310,000
Retained earnings 237,000 139,200
Total liabilities and-
stockholders' equity $946,000 $794,200

Earnings per share for the year ended December 31, 2021, are $1.40. The closing stock price on December 31, 2021, is $28.30.
Required:
Calculate the following profitability ratios for 2021. (Round your answers to 1 decimal place.)

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Answer:

gross profit ratio = gross profit / net sales = $1,126,000 / $3,086,000 = 36.49%

return on assets = net income / total assets = $139,000 / $946,000 = 14.69%

profit margin = net income / net sales = $139,000 / $3,086,000 = 4.5%

asset turnover = net sales / average total assets = $3,086,000 / [($946,000 + $794,200) / 2] = 3.55 times

return on equity = net income / shareholders' equity = $139,000 / $547,000 = 25.41%

price earnings ratio = current sock price / earnings per share = $28.30 / $1.40 = 20.21 times

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A financial ratio, also known as an accounting ratio, is the size of two numeric values derived from a company's financial statements. Many common ratios are used in accountancy to try to determine a corporation's or other company's core financial condition.

The various calculations of the profitability ratios are:

Gross profit ratio = [tex]\frac{\text{gross profit} }{\text{net sales}} =\frac{\$126000}{\$3086000} = 36.49\%[/tex]

Return on assets =[tex]\frac{\text{net income}}{\text{total assets}} = \frac{\$139,000}{\$946,000}= 14.69\%[/tex]

Profit margin = [tex]\frac{\text{net income }}{\text{net sales}} =\frac{ \$139,000}{ \$3,086,000} = 4.5%[/tex]

Asset turnover =  net sales / average total assets = $3,086,000 / [($946,000 + $794,200) / 2] = 3.55 times

Return on equity = [tex]\frac{\text{ net income}}{\text{shareholders' equity}}= \frac{ \$139,000}{ \$547,000} = 25.41\%[/tex]

Price-earnings ratio = [tex]\frac{\text{current sock price }}{\text{earnings per share}} = \frac{ \$28.30}{ \$1.40 } = 20.21 times[/tex]

To know more about the calculations of the ratios, refer to the link below:

https://brainly.com/question/14278421