According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 4.8 percent between 2012 and 2013. Lets see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended December 31, 2013.

2013

2012

Sales Revenue

$

113,000

$

139,500

Cost of Goods Sold

66,500

76,700

Gross Profit

46,500

$

62,800

Selling, General, and Administrative Expenses

37,300

39,600

Interest Expense

630

540

Income before Income Tax Expense

8,570

22,660

Income Tax Expense

2,000

6,300

Net Income

$

6,570

$

16,360

1-a. Compute the gross profit percentage for each year. (Round your answers to 1 decimal place.)

	Gross Profit Percentage
2012		%
2013		%

1-b. Assuming that the change from 2012 to 2013 is the beginning of a sustained trend, is Computer Tycoon likely to earn more or less gross profit from each dollar of sales in 2014?

	More Gross Profit
	Less Gross Profit

2-a. Compute the net profit margin for each year. (Round percentage your answers to 1 decimal place.)

	Net Profit Margin
2012		%
2013		%

2-b. Did Computer Tycoon do a better or worse job of controlling expenses in 2013 relative to 2012?

	Better Job
	Worse Job

3-a.Computer Tycoon reported average net fixed assets of $55,500 in 2013 and $46,400 in 2012. Compute the fixed asset turnover ratios for both years. (Round your answers to 2 decimal places.)

	Fixed Asset Turnover
2012
2013

3-b. Did the company better utilize its investment in fixed assets to generate revenues in 2013 or 2012?

2012

2013 4-a. Computer Tycoon reported average stockholders equity of $55,300 in 2013 and $42,100 in 2012. Compute the return on equity ratios for both years. (Round your percentage answers to 1 decimal place.)

	Return on Equity (ROE)
2012		%
2013		%

4-b. Did the company generate greater returns for stockholders in 2013 than in 2012?

	Yes
	No