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E13-4 (Algo) Computing Profitability Ratios [LO 13-4, LO 13-5] According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment ell 3.8 percent between January and December 2018. Let's see whether these changes are reflected in the income statement of Nizard Computers for the year ended December 31, 2018. Required: 1. Compute the gross profit percentage for each year. Assuming that the change from 2017 to 2018 is the beginning of a sustained trend, is Wizard likely to earn more or less gross profit from each dollar of sales in 2019 ? 2. Compute the net profit margin for each year. Given your calculations here and in requirement 1, explain whether Zigga did a better or worse job of controlling operating expenses in 2018 relative to 2017. 3. Wizard reported average net fixed assets of $54,800 in 2018 and $45,700 in 2017 . Compute the fixed asset turnover ratios for both years. Did the company better utilize its investment in fixed assets to generate revenues in 2018 or 2017 ? 4. Wizard reported average stockholders' equity of $54,600 in 2018 and $41,400 in 2017 . The company has not issued preferred stock. Compute the return on equity ratios for both years. Did the company generate greater returns for stockholders in 2018 than in 2017 ? Complete this question by entering your answers in the tabs below. 1-a. Compute the gross profit percentage for each year. (Round percentage values to 1 decimal place.) 1-b. Assuming that the change from 2017 to 2018 is the beginning of a sustained trend, is Wizard likely to earn more or less Complete this question by entering your answers in the tabs below. 3-a. Wizard reported average net fixed assets of $54,800 in 2018 and $45,700 in 2017 . Compute the fixed asset turnove ratios for both years. (Round your answers to 2 decimal place.) 3-b. Did the company better utilize its investment in fixed assets to generate revenues in 2018 or 2017 ? Complete this question by entering your answers in the tabs below. 1-a. Compute the gross profit percentage for each year. (Round percentage values to 1 decimal place.) 1-b. Assuming that the change from 2017 to 2018 is the beginning of a sustained trend, is Wizard likely to earn more or less gross profit from each dollar of sales in 2019? Complete this question by entering your answers in the tabs below. 4-a. Wizard reported average stockholders' equity of $54,600 in 2018 and $41,400 in 2017 . The company has not issued preferred stock. Compute the return on equity ratios for both years. (Round your answers to 1 decimal place.) 4-b. Did the company generate greater returns for stockholders in 2018 than in 2017? Complete this question by entering your answers in the tabs below. 2-a. Compute the net profit margin for each year. (Round percentage values to 1 decimal place.) 2-b. Did Wizard do a better or worse job of controlling operating expenses in 2018 relative to 2017
