According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2016. Let's see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended December 31, 2016. 2016 2015 $109,000 $133,580 75,100 58,400 38,800 520 19,080 5,900 $ 5,510 13,180 Sales Revenue Cost of Goods Sold Gross Profit Selling, General, and Administrative Expenses Interest Expense Income before Income Tax Expense Income Tax Expense Net Income 64,500 44,500 36,900 590 7,010 1,500 Required 1. Compute the gross profit percentage for each year. Assuming that the change from 2015 to 2016 is the beginning of a sustained 2. Compute the net profit margin for each year. Given your calculations here and in requirement 1, explain whether Computer Tycoon 3. Computer Tycoon reported average net fixed assets of $55,100 in 2016 and $46,000 in 2015. Compute the fixed asset turnover 4. Computer Tycoon reported average stockholders' equity of $54,900 in 2016 and $41,700 in 2015. The company has not issued trend, is Computer Tycoon likely to earn more or less gross profit from each dollar of sales in 2017? did a better or worse job of controlling operating expenses in 2016 relative to 2015. ratios for both years. Did the company better utilize its investment in fixed assets to generate revenues in 2016 or 2015? preferred stock. Compute the return on equity ratios for both years. Did the company generate greater returns for stockholders in 2016 than in 2015? Complete this question by entering your answers in the tabs below. Required 4 Required 2Required 3 Required 1 1-a. Compute the gross profit percentage for each year. (Round your answers to 1 decimal place.) 1-b. Assuming that the change from 2015 to 2016 is the beginning of a sustained trend, is Computer Tycoon likely to earn more or less gross profit from each dollar of sales in 2017? Gross Profit Percentage 1- 2015 2016 1-b. Likely to earn in 2017? OMore Gross Profit OLess Gross Profit Required 2 Required 1 Complete this question by entering your answers in the tabs below. Required 1Required 2 Required 3 Required 4 2-a. Compute the net profit margin for each year. (Round your answers to 1 decimal place.) 2-b. Did Computer Tycoon do a better or worse job of controlling operating expenses in 2016 relative to 2015? 2-a Net Profit Margin 2015 2016 2-b. Controlling operating expenses in 2016 vs 2015? OBetter Job OWorse Jotb Required! Required 3 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 3-a. Computer Tycoon reported average net fixed assets of $55,100 in 2016 and $46,000 in 2015. Compute the fixed asset turnover ratios for both years. (Round your answers to 2 decimal place.) 3-b. Did the company better utilize its investment in fixed assets to generate revenues in 2016 or 2015? Fixed Asset Turnover 3-a 2015 2016 3-b. Investment better utilized? 2015 02016 Required 2 Required 4> Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 4-a. Computer Tycoon reported average stockholders' equity of $54,900 in 2016 and $41,700 in 2015. The company has not issued preferred stock. Compute the return on equity ratios for both years. (Round your answers to 1 decimal place.) 4-b. Did the company generate greater returns for stockholders in 2016 than in 2015? Return on Equity ROE 4-a 2015 2016 4-b. Greater returns generated in 2016? OYes No K Required 3 Required 4
