E12-23A. (Learning Objective 4: Analyzing profitability) Compute four ratios that measure the ability to earn profits for Harper Decor, Inc., whose comparative Income Statements follow:

Additional data:

Did the company’s operating performance improve or deteriorate during 20X6?

Transcribed Image Text:

1 A1 Harper Decor, Inc. Comparative Income Statements Years Ended December 31, 20X6 and 20X5 20X6 $ 120,000 $ 20X5 2 3 Net sales 4 Cost of goods sold 5 Gross profit 6 Selling and general expenses 7 Income from operations 8 Interest expense 9 Income before income tax 10 Income tax expense 11 Net income 12 100,000 64,000 52,000 56,000 48,000 21,000 18,000 35,000 30,000 4,000 2,000 31,000 28,000 10,000 8,000 $ 21,000 $ 20,000