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: 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 Cash Accounts receivable (net) Inventory Property, plant, and equipment (net) Year 2 Year 1 $380, 670* $ 320,000 320,270 268,000 52,000 41,030 36,600 19,370 15,400 7,440 5,700 11,930 $ 4,110 15, 130 43, 710 25,020 $ 87,970 14,530 35,310 18,000 20,160 $ 88,000 $ 8,100 18,000 38,000 21,000 85,100 $ 17,600 34,100 18,000 15, 400 85,100 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 $7,200 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.) Component Percentages Year 2 % % % % % % % % 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: Cash Accounts receivable (net) Inventory Property, plant, and equipment (net) Total assets Current liabilities Long-term liabilities Common shares Retained earnings Total liabilities and shareholders' equity % % % % % % % % % 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 $35,310 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-g. 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 %
