Pinnacle Plus declared and paid a cash dividend of $7,600 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information:

	Current Year				Previous Year
Income Statement
Sales Revenue	$	160,000			$	139,000
Cost of Goods Sold		72,000				68,000
Gross Profit		88,000				71,000
Operating Expenses		46,000				41,000
Interest Expense		5,000				5,000
Income before Income Tax Expense		37,000				25,000
Income Tax Expense (30%)		11,100				7,500
Net Income	$	25,900			$	17,500
Balance Sheet
Cash	$	82,550			$	28,000
Accounts Receivable, Net		27,000				22,000
Inventory		35,000				48,000
Property and Equipment, Net		105,000				115,000
Total Assets	$	249,550			$	213,000
Accounts Payable	$	52,000			$	34,000
Income Tax Payable		1,250				1,000
Note Payable (long-term)		50,000				50,000
Total Liabilities		103,250				85,000
Common Stock (par $10)		96,000				96,000
Retained Earnings		50,300				32,000
Total Liabilities and Stockholders Equity	$	249,550			$	213,000

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 $110,000 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 $120,000 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 companys 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 years financial statements, the companys stock was trading at $28. After the release of its previous years financial statements, the companys stock price was $25 per share. Compute the P/E ratios for both years. Does it appear that investors have become more (or less) optimistic about Pinnacles future success?