Igneous Gravel declared and paid a cash dividend of $7,825 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information:

	Current	Previous
Income Statement
Sales Revenue	$ 337,000	$ 277,000
Cost of Goods Sold	173,650	157,000
Gross Profit	163,350	120,000
Operating Expenses	62,600	52,130
Interest Expense	6,300	5,570
Income before Income Tax Expense	94,450	62,300
Income Tax Expense (30%)	28,335	18,690
Net Income	$ 66,115	$ 43,610
Balance Sheet
Cash	$ 71,165	$ 44,900
Accounts Receivable, Net	32,300	27,500
Inventory	48,000	45,000
Property and Equipment, Net	150,000	137,400
Total Assets	$ 301,465	$ 254,800
Accounts Payable	$ 38,500	$ 36,500
Income Tax Payable	4,725	3,950
Notes Payable (long-term)	100,800	115,200
Total Liabilities	144,025	155,650
Common Stock (par $1)	38,800	38,800
Retained Earnings	118,640	60,350
Total Liabilities and Stockholders Equity	$ 301,465	$ 254,800

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 $88,000 at the beginning of the previous year. Compute the return on equity 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 $138,000 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 Igneous released its current-year financial statements, the companys stock was trading at $33. After the release of its previous-year financial statements, the companys stock price was $17 per share. Compute the P/E ratios for both years. Does it appear that investors have become more (or less) optimistic about Igneouss future success?

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