According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.6 percent between January and December 2018. Lets see whether these changes are reflected in the income statement of Computer Tycoon Incorporated for the year ended December 31, 2018.

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 2018 $ $ 100,000 60,000 40,000 36,000 500 3,500 1,000 $ 2,500 2017 $ 120,000 71,500 48,500 37,000 475 11,025 5,000 $ 6,025 Required: 1. Compute the gross profit percentage for each year. Assuming that the change from 2017 to 2018 is the beginning of a sustained trend, is Computer Tycoon likely to earn more or less gross profit from each dollar of sales in 2019? 2. Compute the net profit margin for each year. Did Computer Tycoon do a better or worse job of controlling operating expenses in 2018 relative to 2017. 3. Computer Tycoon reported average net fixed assets of $54,200 in 2018 and $45,100 in 2017. Compute the fixed asset turnover ratios for both years. Did the company better utilize its investment in fixed assets to generate revenues in 2018 or 2017? 4. Computer Tycoon reported average stockholders' equity of $54,000 in 2018 and $40,800 in 2017. 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 2018 than in 2017? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 1-a. Compute the gross profit percentage for each year. (Round percentage values to 1 decimal place.) 1-b. Assuming that the change from 2017 to 2018 is the beginning of a sustained trend, is Computer Tycoon likely to earn more or less gross profit from each dollar of sales in 2019? 1-a. 2017 1-a. 2018 1-b. Likely to earn in 2019? % % 2-a. Compute the net profit margin for each year. (Round percentage values to 1 decimal place.) 2-b. Did Computer Tycoon do a better or worse job of controlling operating expenses in 2018 relative to 2017? % 2-a. 2017 2-a. 2018 2-b. Controlling operating expenses in 2018 vs 2017? Required 1 Required 2 Required 3 Required 4 3-a. Computer Tycoon reported average net fixed assets of $54,200 in 2018 and $45,100 in 2017. Compute the fixed asset turnover ratios for both years. (Round your answers to 2 decimal places.) 3-b. Did the company better utilize its investment in fixed assets to generate revenues in 2018 or 2017? 3-a. 2017 3-a. 2018 3-b. Investment better utilized? 4-a. Computer Tycoon reported average stockholders' equity of $54,000 in 2018 and $40,800 in 2017. 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 2018 than in 2017? 4-a. 2017 4-a. 2018 4-b. Greater returns generated in 2018? % %