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Assume the average cost of computer equipment fell 22.5 percent between 2016 and 2017. Let's see whether these changes are reflected in the income statement
Assume the average cost of computer equipment fell 22.5 percent between 2016 and 2017. Let's see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended December 31, 2017. Sales Revenues Cost of Goods Sold 2017 $100,000 55,000 2016 $126,000 65,000 Gross Profit Selling, General, and Administrative Expenses Interest Expense 45,000 32,000 300 61,000 32,000 280 Income Before Income Tax Expense Income Tax Expense 12,700 3,150 28,720 5,902 Net Income $ 9,550 $ 22,818 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 % % 2-b. Not available in Connect. 3-a. Computer Tycoon reported average net fixed assets of $58,200 in 2017 and $52,000 in 2016. Compute the fixed asset turnover ratios for both years. (Round your answers to 2 decimal places.) 2017 2016 times times Fixed asset turnover ratio 3-b. Not available in Connect. 4-a. Computer Tycoon reported average shareholders' equity of $58,000 in 2017 and $44,800 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? O Yes O No
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