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Golden Corporation declared and paid $4,900 of cash dividends during the current year ended December 31. Its financial statements also reported the following summarized data: Current Previous Income Statement Sales revenue Cost of goods sold Gross profit Operating expenses Interest expense Income before income taxes Income tax expense Net income Balance Sheet Cash Accounts receivable (net) Inventory Property and equipment (net) $275,000 148,000 127,000 72,300 4,600 50, 100 15,030 $ 35,070 $241,000 138,000 103,000 65,600 4,500 32,900 4,900 $ 28,000 Current liabilities Note payable (long-term) Common stock (par $5) Additional paid-in capital Retained earnings $ 7,370 38,000 59,000 64,000 $168,370 $ 15,200 64,000 41,400 8,800 38,970 $ 168,370 $ 9,900 32,500 54,000 57,000 $ 153,400 $ 32,300 64,000 41,400 6,900 8,800 $153,400 Required: 1. Compute the gross profit percentage for 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? TIP: To calculate EPS, use the balance in Common Stock to determine the number of shares outstanding. Common Stock equals the par value per share times the number of shares. 4. Stockholders' equity totaled $41,400 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 $44,500 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 company's 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 Golden released its current year's financial statements, the company's stock was trading at $49. After the release of its previous year's financial statements, the company's stock price was $37 per share. Compute the P/E ratios for both years. Does it appear that investors have become more (or less) optimistic about Golden's future success? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 4-a. Stockholders' equity totaled $41,400 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the current and previous years. (Round your answers to 1 decimal place.) 4-b. Are the current year results better, or worse, than those for the previous year? 4-a. Current Year Previous Year Return on Equity 43.6% 49.0% | 4-b. Current year return on equity ratio is: O Better Worse Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 5-a. Net property and equipment totaled $44,500 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? 5-a. Fixed Asset Turnover Current Year Previous Year 5-b. Current year fixed asset turnover is: O Better O Worse
