Columbia Associates declared and paid a cash dividend of $6,700 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information:

	Current Year	Previous Year
Income Statement
Sales Revenue	$ 115,000	$ 103,000
Cost of Goods Sold	54,000	50,000
Gross Profit	61,000	53,000
Operating Expenses	37,000	33,800
Interest Expense	4,100	4,100
Income before Income Tax Expense	19,900	15,100
Income Tax Expense (30%)	5,970	4,530
Net Income	$ 13,930	$ 10,570
Balance Sheet
Cash	$ 70,805	$ 37,000
Accounts Receivable, Net	18,000	13,000
Inventory	26,000	39,000
Property and Equipment, Net	96,000	106,000
Total Assets	$ 210,805	$ 195,000
Accounts Payable	$ 43,000	$ 34,900
Income Tax Payable	1,025	550
Notes Payable (long-term)	41,000	41,000
Total Liabilities	85,025	76,450
Common Stock (par $10)	90,600	90,600
Retained Earnings	35,180	27,950
Total Liabilities and Stockholders Equity	$ 210,805	$ 195,000

Required:

1. Compute the gross profit percentage in the current and previous years. Are the current-year results better, or worse, than those for the previous year?
2. Compute the net profit margin for the current and previous years. Are the current-year results better, or worse, than those for the previous year?
3. Compute the earnings per share for the current and previous years. Are the current-year results better, or worse, than those for the previous year?
4. Stockholders equity totaled $101,000 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the current and previous years. Are the current-year results better, or worse, than those for the previous year?
5. Net property and equipment totaled $111,000 at the beginning of the previous year. Compute the fixed asset turnover ratios for the current and previous years. Are the current-year results better, or worse, than those for the previous year?
6. Compute the debt-to-assets ratios for the current and previous years. Is debt providing financing for a larger or smaller proportion of the companys asset growth?
7. Compute the times interest earned ratios for the current and previous years. Are the current-year results better, or worse, than those for the previous year?
8. After Columbia Associates released its current years financial statements, the companys stock was trading at $19. After the release of its previous years financial statements, the companys stock price was $16 per share. Compute the P/E ratios for both years. Does it appear that investors have become more (or less) optimistic about Columbias future success?

Req 1:

1-a. Compute the gross profit percentage in the current and previous years. (Round percentage values to 1 decimal place.)

1-b. Are the current-year results better, or worse, than those for the previous year?

Req 2:

2-a. Compute the net profit margin for the current and previous years. (Round percentage values to 1 decimal place.)

2-b. Are the current-year results better, or worse, than those for the previous year?

Req 3:

3-a. Compute the earnings per share for the current and previous years. (Round your answers to 2 decimal places.)

3-b. Are the current-year results better, or worse, than those for the previous year?

Req 4:

4-a. Stockholders equity totaled $101,000 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the current and previous years. (Round percentage values to 1 decimal place.)

4-b. Are the current-year results better, or worse, than those for the previous year?

Req 5:

5-a. Net property and equipment totaled $111,000 at the beginning of the previous year. Compute the fixed asset turnover ratios for the current and previous years. (Round your answers to 2 decimal places.)

5-b. Are the current-year results better, or worse, than those for the previous year?

Req 6:

6-a. Compute the debt-to-assets ratios for the current and previous years. (Round your answers to 2 decimal places.)

6-b. Is debt providing financing for a larger or smaller proportion of the companys asset growth?

Req 7:

7-a. Compute the times interest earned ratios for the current and previous years. (Round your answers to 1 decimal place.)

7-b. Are the current-year results better, or worse, than those for the previous year?

Req 8:

8-a. After Columbia Associates released its current years financial statements, the companys stock was trading at $19. After the release of its previous years financial statements, the companys stock price was $16 per share. Compute the P/E ratios for both years. (Round your intermediate calculations to 2 decimal places and final answers to 1 decimal place.)

8-b. Does it appear that investors have become more (or less) optimistic about Columbias future success?