The folowing income statement and balance sheet for Virtual Gaming Systems are p
ID: 2561020 • Letter: T
Question
The folowing income statement and balance sheet for Virtual Gaming Systems are provided Q Search GAMING SYSTEMS Income Statement the year ended December 31, 2015 53,086,000 1,960,000 1,126,000 Net sales Cost of goods sold Gross pro Operating $868,000 Depreclation 32,000 Loss on sale o 9,000 Interest expense 20,000 video Income tax58,000 Total expenses 987,000 s 139,000 essays Net income Balance Sheet 2015 2014 Assets 196,000 $154,000 Cash Accounts receivable Prepaid rent Investment in bonds Screen Shot 2017-12-03 at 8.11.14 PM 91,000 70,000 115.000 145,000 3,000 7200 Search 115.000 220,000 250,000 280,000 220,000 (B4,000) Eamings per share for the year ended December 31, 2015, are $1.40. The closing stock price on December 31, 2015, is $28.30. Less Aconda eddepreciaton ,000) Total assets 946,000 5794,200 Required Calculate the following profitability ratios for 2015. (Round your answers to 1 decimal place.) Equity Current lisbiles 76,000 $91,000 8000 4,000 1. Gross profit ratio 2. Return on assets 3. Profit margin 4 Asset turnover 5. Return on equity Accounts peyable nterest payable income tax payable 20,000 15,000 295,000 235,000 10,000 310,000 times Common stock 237,000 139,200 Total tabines and stockholders $946.000 5794 200 equity ratioExplanation / Answer
1) Gross profit ratio = gross profit / net sales
Gross profit ratio = net sales - cost of goods sold / net sales
Gross profit ratio = $ 1,126,000 / $ 3,086,000
Gross profit ratio = 0.4
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2) Return on assets = Net Income / Average assets
Average assets = (Assets of 2014 + Assets of 2015) / 2
Average assets = $ 870,100
ROA = $ 139,000 / $ 870,100
ROA = 0.2
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3) Profit margin = Net income / Net sales
Profit margin = $ 139,000 / $ 3,086,000
Profit margin = 0.1
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4) Asset turnover = Net sales / Total assets
Asset turnover = $ 3,086,000 / $ 870,100
Asset turnover = 3.5 times
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