Use the data given in PB13-1 for Tiger Audio.

Required:

1. Compute the gross profit percentage in the current and previous years. Are the current year results better, or worse, than those for the previous year?
2. Compute the net profit margin for the current and previous years. Are the current year results better, or worse, than those for the previous year?
3. Compute the earnings per share for the current and previous years. Are the current year results better, or worse, than those for the previous year?
4. Stockholders’ equity totaled $65,000 at the beginning of the previous year. Compute the return on equity ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year?
5. Net property and equipment totaled $115,000 at the beginning of the previous year. Compute the fixed asset turnover ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year?
6. Compute the debt-to-assets ratios for the current and previous years. Is debt providing financing for a larger or smaller proportion of the company’s asset growth?
7. Compute the times interest earned ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year?
8. After Tiger released its current year financial statements, the company’s stock was trading at $17. After the release of its previous year financial statements, the company’s stock price was $12 per share. Compute the P/E ratios for both years. Round to one decimal place. Does it appear that investors have become more (or less) optimistic about Tiger’s future success?

Data From PB13-1

Tiger Audio declared and paid a cash dividend of $5,525 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information:

Transcribed Image Text:

Increase (Decrease) in Current (versus Previous) Current Previous Amount Percentage Income Statement $222,000 127,650 Sales Revenue $185,000 Cost of Goods Sold 111,000 94,350 39,600 Gross Profit 74,000 33,730 Operating Expenses Interest Expense Income before Income Tax Expense Income Tax Expense (30%) 4,000 3,270 50,750 15,225 37,000 11,100 Net Income $ 35,525 $ 25,900 Balance Sheet $ 38,000 $ 40,000 18,500 25,000 Cash 16,000 22,000 Accounts Receivable, Net Inventory Property and Equipment, Net 127,000 119,000 Total Assets $210,500 $195,000 Accounts Payable Income Tax Payable Note Payable (long-term) $ 27,000 3,000 75,500 $ 25,000 2,800 92,200 Total Liabilities 105,500 25,000 120,000 Common Stock (par $1) Retained Earnings 25,000 80,000 50,000 Total Liabilities and Stockholders' Equity $210,500 $195,000