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. Lets see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended December 31, 2016.

	2016				2015
Sales Revenue		$	118,000			$	147,000
Cost of Goods Sold			69,000				78,700
Gross Profit			49,000				68,300
Selling, General, and Administrative Expenses			37,800				40,600
Interest Expense			680				565
Income before Income Tax Expense			10,520				27,135
Income Tax Expense			2,500				6,800
Net Income		$	8,020			$	20,335

Required:

1. Compute the gross profit percentage for each year. 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?
2. Compute the net profit margin for each year. Given your calculations here and in requirement 1, explain whether Computer Tycoon did a better or worse job of controlling operating expenses in 2016 relative to 2015.
3. Computer Tycoon reported average net fixed assets of $56,000 in 2016 and $46,900 in 2015. Compute the fixed asset turnover ratios for both years. Did the company better utilize its investment in fixed assets to generate revenues in 2016 or 2015?
4. Computer Tycoon reported average stockholders equity of $55,800 in 2016 and $42,600 in 2015. The company has not issued preferred stock. Compute the return on equity ratios for both years. Did the company generate greater returns for stockholders in 2016 than in 2015?

Required 1 Required 2 Required 3 Required 4 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? 1-a Gross Profit Percentage 2015 2016 1-b. Likely to earn in 2017? More Gross Profit Less Gross Profit Required 1 Required 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? O Better Job Worse Job Required 1 Required 2 Required 3 Required 4 3-a. Computer Tycoon reported average net fixed assets of $56,000 in 2016 and $46,900 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? 3-a. Fixed Asset Turnover 2015 2016 3-b. Investment better utilized? 2015 O 2016 Required 1 Required 2 Required 3 Required 4 4-a. Computer Tycoon reported average stockholders' equity of $55,800 in 2016 and $42,600 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? 4-a. Return on Equity (ROE) 2015 2016 4-b. Greater returns generated in 2016? JOYes No