Nova Incorporated declared and paid $4,000 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	$ 230,000	$ 205,000
Cost of goods sold	130,000	120,000
Gross profit	100,000	85,000
Operating expenses	63,300	58,400
Interest expense	3,700	3,600
Income before income taxes	33,000	23,000
Income tax expense	9,900	4,000
Net income	$ 23,100	$ 19,000
Balance Sheet
Cash	$ 7,600	$ 9,000
Accounts receivable (net)	29,000	28,000
Inventory	50,000	45,000
Property and equipment (net)	55,000	48,000
Total assets	$ 141,600	$ 130,000
Current liabilities	$ 17,500	$ 26,000
Notes payable (long-term)	55,000	55,000
Common stock (par $5)	36,000	36,000
Additional paid-in capital	7,000	6,000
Retained earnings	26,100	7,000
Total liabilities and stockholders equity	$ 141,600	$ 130,000

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?

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?

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.

Stockholders equity totaled $36,000 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?

Net property and equipment totaled $40,000 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?

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?

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?

After Nova released its current years financial statements, the companys stock was trading at $40. After the release of its previous years financial statements, the companys stock price was $28 per share. Compute the P/E ratios for both years. Does it appear that investors have become more (or less) optimistic about Novas future success