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Assume the average cost of computer equipment fell 21.6 percent between 2016 and 2017. Lets see whether these changes are reflected in the income statement

Assume the average cost of computer equipment fell 21.6 percent between 2016 and 2017. Lets see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended December 31, 2017.

Sales Revenues $ 98,000 $ 122,233
Cost of Goods Sold 60,200 73,340
Gross Profit 37,800 48,893
Selling, General, and Administrative Expenses 35,000 35,000
Interest Expense 525 410
Income Before Income Tax Expense 2,275 13,483
Income Tax Expense 1,500 4,788
Net Income $ 775 $ 8,695

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

2017 2016
Gross profit % %

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

2017 2016
Net profit % %

3-a. Computer Tycoon reported average net fixed assets of $55,700 in 2017 and $51,100 in 2016. Compute the fixed asset turnover ratios for both years. (Round your answers to 2 decimal places.)

2017 2016
Fixed asset turnover ratio times times

4-a. Computer Tycoon reported average shareholders equity of $55,500 in 2017 and $42,300 in 2016. Compute the return on equity ratios for both years. (Round your answers to 1 decimal place.)

2017 2016
Return on equity (ROE) % %

4-b. Did the company generate greater returns for shareholders in 2017 than in 2016?

multiple choice

Yes

No

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