PA13-2 Analyzing Comparative Financial Statements Using Selected Ratios [LO 13-4, LO 13-5] The comparative financial statements prepared at December 31 for Pinnacle Plus showed the following summarized data: Current Year Previous Year Income Statement Sales Revenue $195,000 $167,000 Cost of Goods Sold 86,000 82,000 Gross Profit Operating Expenses Interest Expense 109,000 53,000 5,700 85,000 46,600 5,700 Income before Income Tax Expense Income Tax Expense (30%) 50,300 15,090 32,700 9,810 Net Income $ 35,210 $ 22,890 Balance Sheet Cash Accounts Receivable, Net Inventory Property and Equipment, Net $ 91,685 34,000 42,000 112,000 $ 21,000 29,000 55,000 122,000 Total Assets $279,685 $227,000 Accounts Payable Income Tax Payable Note Payable (long-term) $ 59,000 1,425 57,000 $ 33,300 1,350 57,000 Total Liabilities Common Stock (par $10) Retained Earnings 117,425 100,200 62,060 91,650 100,200 35,150 Total Liabilities and Stockholders' Equity $279,685 $227,000 During the current year, cash dividends amounting to $8,300 were declared and paid. Required: 1-a. Compute the gross profit percentage in the current and previous years. (Round your answers to 1 decimal place.) Gross Profit Percentage Current Year Previous Year % Required: 1-a. Compute the gross profit percentage in the current and previous years. (Round your answers to 1 decimal place.) Gross Profit Percentage Current Year Previous Year 1-b. Are the current year results better, or worse than those for the previous year? Better Worse 2-a. Compute the net profit margin for the current and previous years. (Round your answers to 1 decimal place.) Net Profit Margin Current Year Previous Year 2.b. Are the current year results better, or worse, than those for the previous year? Better Worse 3-a. Compute the earnings per share for the current and previous years. (Round your answers to 2 decimal places.) Earnings per Share Current Year Previous Year 3-b. Are the current year results better, or worse than those for the previous year? Better Worse 4-a, Stockholders' equity totaled $117,000 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the current and previous years. (Round your answers to 1 decimal place.) Return on Equity Current Year Previous Year Are the current year results better, or worse, than those for the previous year? Better Worse 5-a. Net property and equipment totaled $127.000 at the beginning of the previous year. Compute the forced asset turnover ratios for the current and previous years. (Round your answers to 2 decimal places.) Fixed Asset Turnover Current Year Previous Year b. Are the current year results better, or worse than those for the previous year? Better Worse 6-a. Compute the debt-to-assets ratios for the current and previous years. (Round your answers to 2 decimal places.) Debt-to-Assets Current Year Previous Year 6-a. Compute the debt-to-assets ratios for the current and previous years. (Round your answers to 2 decimal places.) Debt-to-Assets Current Year Previous Year 6-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 eamed ratios for the current and previous years. (Round your answers to 1 decimal place.) Times Interest Earned Current Year Previous Year 1 7-b. Are the current year results better, or worse than those for the previous year? Better 8-a. After Pinnacle Plus released its current year's financial statements, the company's stock was trading at $35. After the release of its previous year's financial statements, the company's stock price was $32 per share. Compute the P/E ratios for both years. (Round your intermediate calculations to 2 decimal places and final answers to 1 decimal place.) Price/Earnings Ratio Current Year Previous Year
