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	$	379,790	*		$	320,000
Cost of sales		321,700				270,000
Gross margin		58,090				50,000
Operating expenses and interest expense		39,220				35,000
Earnings before income taxes		18,870				15,000
Income tax expense		6,690				5,100
Net earnings	$	12,180			$	9,900
Statement of Financial Position
Cash	$	4,170			$	8,200
Accounts receivable (net)		15,990				19,000
Inventory		46,050				40,000
Property, plant, and equipment (net)		27,430				23,000
	$	93,640			$	90,200
Current liabilities (no interest)	$	15,350			$	18,500
Non-current liabilities (10% interest)		36,810				35,900
Common shares (6,000 shares)		24,000				24,000
Retained earnings		17,480				11,800
	$	93,640			$	90,200

*One-third was credit sales. During Year 2, cash dividends amounting to $6,500 were declared and paid.

Required:

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.)

Compute the following for year 2:

2-a. Percentage markup on sales.

2-b. Income tax rate. (Round percentage answer to 1 decimal place (i.e., 0.124 should be entered as 12.4).)

2-c. Net profit margin ratio. Was it a good or poor indicator of performance?