P12-2 Analyzing Comparative Financial Statements by Using Percentages and Selected Ratios LO12-5, 12-6, 12-9 The comparative financial statements prepared at December 31, year 2, for Goldfish Company showed the following summarized data: Year 2 Year 1 Statement of Earnings Sales revenue Cost of sales Gross margin Operating expenses and interest expense Earnings before income taxes Income tax expense Net earnings Statement of Financial Position $332,980# $280,000 267,950 224,000 65,030 56,000 44,660 39,800 20, 370 16,200 8,930 6,900 $ 11,440 $ 9,300 Cash Accounts receivable (net) Inventory Property, plant, and equipment (net) $ 4,010 13,450 39, 110 51,240 $ 107,810 $ 13,590 38,080 36,000 20,170 $ 107,840 $ 7,900 16,000 34,000 43,000 $100,900 $ 15,800 35,400 36,000 13,700 $100,900 Current liabilities (no interest) Non-current liabilities (10% interest) Common shares (6,000 shares) Retained earningst *One-third was credit sales. During Year 2, cash dividends amounting to $5,000 were declared and paid. 1. Present component percentages for Year 2 only. (Input all amounts as positive values. Round the final answers to the nearest whole percent. Percentages may not add exactly due to rounding.) Component Percentages Year 2 Statement of earnings: Sales revenue % % 0 % Cost of sales Gross margin Operating expenses and interest expense Earnings before income taxes Income tax expense Net earnings Statement of financial position: Todo % 0 % % 0 % Cash % % Accounts receivable (net) Inventory Property, plant, and equipment (net) Total assets % % 0 % Current liabilities % % % Long-term liabilities Common shares Retained earnings Total liabilities and shareholders' equity % 0 % Compute the following for year 2: 2-a. Percentage markup on sales. (Round percentage answer to 1 decimal place (i.e., 0.124 should be entered as 12.4).) Average percentage % 2-b. Income tax rate. (Round percentage answer to 1 decimal place (i.e., 0.124 should be entered as 12.4).) Average income tax % 2-c. Net profit margin ratio. Was it a good or poor indicator of performance? (Round percentage answer to 2 decimal places (i.e., 0.1243 should be entered as 12.43).) Net profit margin ratio % 2-d. Percentage of total resources invested in property, plant, and equipment. (Round percentage answer to 2 decimal places (i.e 0.1243 should be entered as 12.43).) Percentage % 2-e. Debt-to-equity ratio. Interpret the result. (Round the final answer to 2 decimal places.) Debt-to-equity ratio 2-f. Return on assets. Assume that long-term debt increased to $38,080 in month 1 of year 2. (Round intermediate calculations to 3 decimal places and percentage answer to 2 decimal places (i.e., 0.1243 should be entered as 12.43).) Return on assets % 2-9. Return on equity. (Round percentage answer to 2 decimal places (i.e., 0.1243 should be entered as 12.43).) Return on equity % 2-h. Financial leverage percentage. Did borrowing from creditors benefit shareholders? (Round intermediate calculations and final answer to 2 decimal places.) Financial leverage percentage %
