Pinnacle Plus declared and paid a cash dividend of $7,100 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information: Current Year Previous Year $135,000 62,000 73,000 41,000 4,500 27,500 8,250 $ 19, 250 $119,000 58,000 61,000 37,000 4,500 19,500 5,850 $ 13,650 Income Statement Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Interest Expense Income before Income Tax Expense Income Tax Expense (30%) Net Income Balance Sheet Cash Accounts Receivable, Net Inventory Property and Equipment, Net Total Assets Accounts Payable Income Tax Payable Note Payable (long-term) Total Liabilities Common Stock (par $10) Retained Earnings Total Liabilities and Stockholders' Equity $ 76,025 22,000 30,000 100,000 $228,025 $ 47,000 1, 125 45,000 93, 125 93,000 41,900 $228,025 $ 33,000 17,000 43,000 110,000 $203,000 $ 34,500 750 45,000 80, 250 93,000 29,750 $203,000 Required: 1. Compute the gross profit percentage in the current and previous years. Are the current year results better, or worse, than those for the previous year? 2. Compute the net profit margin for the current and previous years. Are the current year results better, or worse, than those for the previous year? 3. Compute the earnings per share for the current and previous years. Are the current year results better, or worse, than those for the previous year? 4. Stockholders' equity totaled $105,000 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 5. Net property and equipment totaled $115,000 at the beginning of the previous year. Compute the fixed asset turnover ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 6. Compute the debt-to-assets ratios for the current and previous years. Is debt providing financing for a larger or smaller proportion of the company's asset growth? 7. Compute the times interest earned ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 8. After Pinnacle Plus released its current year's financial statements, the company's stock was trading at $23. After the release of its previous year's financial statements, the company's stock price was $20 per share. Compute the P/E ratios for both years. Does it appear that investors have become more or less) optimistic about Pinnacle's future success? Required: 1. Compute the gross profit percentage in the current and previous years. Are the current year results better, or worse, than those for the previous year? 2. Compute the net profit margin for the current and previous years. Are the current year results better, or worse, than those for the previous year? 3. Compute the earnings per share for the current and previous years. Are the current year results better, or worse, than those for the previous year? 4. Stockholders' equity totaled $105,000 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 5. Net property and equipment totaled $115,000 at the beginning of the previous year. Compute the fixed asset turnover ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 6. Compute the debt-to-assets ratios for the current and previous years. Is debt providing financing for a larger or smaller proportion of the company's asset growth? 7. Compute the times interest earned ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 8. After Pinnacle Plus released its current year's financial statements, the company's stock was trading at $23. After the release of its previous year's financial statements, the company's stock price was $20 per share. Compute the P/E ratios for both years. Does it appear that investors have become more (or less) optimistic about Pinnacle's future success? Complete this question by entering your answers in the tabs below. Required Required Required Required Required Required Required Required 1 2 3 4 5 6 7 8 5-a. Net property and equipment totaled $115,000 at the beginning of the previous year. Compute the fixed asset turnover ratios for the current and previous years. (Round your answers to 2 decimal places.) 5-b. Are the current year results better, or worse, than those for the previous year? Show less A 5- a. Fixed Asset Turnover Current Year Previous Year 5- b. Current year fixed asset turnover? O Better O Worse Required: 1. Compute the gross profit percentage in the current and previous years. Are the current year results better, or worse, than those for the previous year? 2. Compute the net profit margin for the current and previous years. Are the current year results better, or worse, than those for the previous year? 3. Compute the earnings per share for the current and previous years. Are the current year results better, or worse, than those for the previous year? 4. Stockholders' equity totaled $105,000 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 5. Net property and equipment totaled $115,000 at the beginning of the previous year. Compute the fixed asset turnover ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 6. Compute the debt-to-assets ratios for the current and previous years. Is debt providing financing for a larger or smaller proportion of the company's asset growth? 7. Compute the times interest earned ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 8. After Pinnacle Plus released its current year's financial statements, the company's stock was trading at $23. After the release of its previous year's financial statements, the company's stock price was $20 per share. Compute the P/E ratios for both years. Does it appear that investors have become more or less) optimistic about Pinnacle's future success? Complete this question by entering your answers in the tabs below. Required Required Required Required Required Required Required Required 1 2 3 4 5 6 7 8 7-a. Compute the times interest earned ratios for the current and previous years. (Round your answers to 1 decimal place.) 7-b. Are the current year results better, or worse, than those for the previous year? Show less Times 7- Interest a. Earned Current Year Previous Year 7- b Current year times interest earned ratio? O Better O Worse Required: 1. Compute the gross profit percentage in the current and previous years. Are the current year results better, or worse, than those for the previous year? 2. Compute the net profit margin for the current and previous years. Are the current year results better, or worse, than those for the previous year? 3. Compute the earnings per share for the current and previous years. Are the current year results better, or worse, than those for the previous year? 4. Stockholders' equity totaled $105,000 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 5. Net property and equipment totaled $115,000 at the beginning of the previous year. Compute the fixed asset turnover ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 6. Compute the debt-to-assets ratios for the current and previous years. Is debt providing financing for a larger or smaller proportion of the company's asset growth? 7. Compute the times interest earned ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 8. After Pinnacle Plus released its current year's financial statements, the company's stock was trading at $23. After the release of its previous year's financial statements, the company's stock price was $20 per share. Compute the P/E ratios for both years. Does it appear that investors have become more or less) optimistic about Pinnacle's future success? Complete this question by entering your answers in the tabs below. Required Required Required Required Required Required Required Required 1 2 3 4 5 6 8 8-a. After Pinnacle Plus released its current year's financial statements, the company's stock was trading at $23. After the release of its previous year's financial statements, the company's stock price was $20 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.) 8-b. Does it appear that investors have become more or less) optimistic about Pinnacle's future success? Show less A Price/Earnings Ratio Current Year Previous Year 8- a. 8- b. Current year P/E ratio? O More Optimistic OLess Optimistic
