Pinnacle Plus declared and paid a cash dividend of $8,900 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information: 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 Current Year Previous Year $225,000 $191,000 98,000 94,000 127,000 97,000 59,000 51,400 6,300 6,300 61,700 39,300 18,510 11,790 $ 43,190 $ 27,510 $ 99,515 40,000 48,000 118,000 $305,515 $ 65,000 1,575 63,000 $ 15,000 35,000 61,000 128,000 $239,000 $ 32,700 1,650 63,000 129,575 97,350 103,800 103,800 72,140 37,850 $305,515 $239,000 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 $123,000 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 $133,000 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 $41. After the release of its previous year's financial statements, the company's stock price was $38 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 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 3-a. Compute the earnings per share for the current and previous years. (Round your answers to 2 decimal places.) 3-b. Are the current year results better, or worse, than those for the previous year? 3- a. Earnings per Share Current Year $ 0.42 Previous Year $ 0.26 3- b. Current year EPS? Better OWorse Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 4-a. Stockholders' equity totaled $123,000 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.) 4-b. Are the current year results better, or worse, than those for the previous year? 4- a. Current Year Previous Year Return on Equity 24.5% 19.4 % 4- b. Current year return on equity ratio? Better OWorse Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 5 5-a. Net property and equipment totaled $133,000 at the beginning vious 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? 5- Fixed Asset a. Turnover Current Year 1.91 Previous Year 1.49 5- Current year fixed asset turnover? b. Better OWorse Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 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? 7- a. Times Interest Current Year Previous Year Earned 10.9 7.2 7- Current year times interest earned ratio? b. Better Worse Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 8-a. After Pinnacle Plus released its current year's financial statements, the company's stock was trading at $41. After the release of its previous year's financial statements, the company's stock price was $38 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? 8- a. Current Year Previous Year 8- b. Current year P/E ratio? More Optimistic Less Optimistic Price/Earnings Ratio 9.9 7.8 Show less