PA13-2 Analyzing Comparative Financial Statements Using Selected Ratios (L04, LO5] The comparative financial statements prepared at December 31, 2014, for Pinnacle Plus showed the following summarized data: 2014 2013 Income Statement Sales Revenue" Cost of Goods Sold $124,000 57,600 $113.000 53,600 Gross Profit Operating Expenses Interest Expense 66,400 40,200 3,600 59,400 37200 3,600 Income before Income Tax Expense Income Tax Expense (30%) 22.600 6,7805 18,600 ,580 $ 15,820 $ 13.020 Net Income Net Income $ 15,820 $ 13,020 Balance Sheet Cash Accounts Receivable, Net Inventory Property and equipment, Net $ 47,461 33,000 32,000 87,000 $ 13,740 39,000 34,000 97,000 Total Assets $ 199,461 $183,740 $ $ 30,180 Accounts Payable Income Taxes Payable Note Payable, Long-Term 35,781 960 36,000 460 36,000 Total Liabilities Contributed Capital (9,000 shares) Retained Earningst 72,741 90,000 36,720 66,640 90,000 27,100 $ 199,461 $183,740 Total Liabilities and Shareholders' Equity *One-half of all sales are on credit. During 2014, cash dividends amounting to $6,200 were declared and paid. Required: 1-a. Compute the gross profit percentage in 2014 and 2013. (Round your answers to 1 decimal place.) Gross Profit Percentage 2014 2013 % 1-b. Is the trend going in the right direction? Yes 47 18 Next > 2-a. Compute the net profit margin for 2014 and 2013. (Round your answers to 1 decimal place.) Net Profit Margin 2014 2013 2-b. Is the trend going in the right direction? Yes 3-a. Compute the earnings per share for 2014 and 2013. (Round your answers to 2 decimal places.) Earnings por Share 2014 2013 3-b. Does the trend look good or bad? Good Bad 4-a. Shareholders' equity totalled $100,000 at the end of 2012. Compute the return on equity (ROE) ratios for 2014 and 2013. (Round your answers to 1 decimal place.) 4-a. Shareholders' equity totalled $100,000 at the end of 2012. Compute the return on equity (ROE) ratios for 2014 and 2013. (Round your answers to 1 decimal place.) Return on Equity 2014 2013 ces 4-b. Is the trend going in the right direction? No Yes 5-a. Net property and equipment totalled $102,000 at the end of 2012. Compute the fixed asset turnover ratios for 2014 and 2013. (Round your answers to 2 decimal places.) 5-a. Net property and equipment totalled $102,000 at the end of 2012. Compute the fixed asset turnover ratios for 2014 and 2013. (Round your answers to 2 decimal places.) Fixed Asset Turnover 2014 2013 5-b. Is the trend going in the right direction? No o Yes 6-a. Compute the debt-to-assets ratios for 2014 and 2013. (Round your answers to 2 decimal places.) Help 6-a. Compute the debt-to-assets ratios for 2014 and 2013. (Round your answers to 2 decimal places.) Save Debt-to- 2014 2013 b Is debt providing financing for a larger or smaller proportion of the company's asset growth? Larger proportion Smaller proportion 7-a. Compute the times interest earned ratios for 2014 and 2013. (Round your answers to 1 Harimalniarel HIP 7-a. Compute the times interest earned ratios for 2014 and 2013. (Round your answers to 1 decimal place.) Times InterestEurned 2014 times 2013 times ences 7-b. Does the outcome of ratio in 2014 appears to be good or bad for the company? Good Bad 8-a. After Pinnacle Plus released its 2014 financial statements, the company's shares were trading at $27.80. After the release of its 2013 financial statements, the company's share price was $22.70 per share. Compute the P/E ratios for both years. (Round your answers to 1 decimal place.) Saved Help Sa B-a. After Pinnacle Plus released its 2014 financial statements, the company's shares were trading at $27.80. After the release of its 2013 financial statements, the company's share price was $22.70 per share. Compute the P/E ratios for both years. (Round your answers to 1 decimal place.) Pricol Earnings 2014 2013 8-b. Does it appear that investors have become more or less) optimistic about Pinnacle's future success? Less optimistic More optimistic