The comparative financial statements prepared at December 31, 2017, for Pinnacle Plus showed the following summarized data:
The comparative nancial statements prepared at December 31, 2017. for Pinnacle Plus showed the following summarized data: 2017 2016 Income Statement Sales Revenue* $113,000 $102,000 Cost of Goods Sold 53,200 49,200 Gross Profit 59,000 52,000 Operating Expenses 36,900 33,900 Interest Expense 4,300 4,300 Income before Income Tax Expense 13,600 14,600 Income Tax Expense (30%} 5,500 4,300 Net Income $ 13,020 $ 10,220 Balance Sheet Cash $ 55,005 $ 17,030 Accounts Receivable, Net 40,000 33,500 Inventory 26,500 41,000 Property and equipment, Net 101,000 111,000 Total Assets $223,305 $202,530 Accounts Payable $ 53,055 $ 39,700 Income Tax Payable 1,030 530 Note Payable, Long-Term 43,000 43,000 Total Liabilities 97,005 83,230 Contributed Capital (9,150 shares} 91,500 91,500 Retained Earningsf 33,920 27,000 Total Liabilities and Shareholders' Equity $223,305 $202,530 One-half of all sales are on credit. During 2017, cash dividends amounting to $6,900 were declared and paid. Required: 1-a. Compute the gross profit percentage in 2017 and 2016. (Round your answers to 1 decimal place.) Gross Profit Percentage 2017 %% 2016 1-b. Is the trend going in the right direction? O No O Yes2-a. Compute the net profit margin for 2017 and 2016. (Round your answers to 1 decimal place.) Net Profit Margin 2017 % 2016 2-b. Is the trend going in the right direction? O Yes O No 3-a. Compute the earnings per share for 2017 and 2016. (Round your answers to 2 decimal places.) Earnings per Share 2017 20163-b. Does the trend look good or bad? O Bad O Good 4-a. Shareholders' equity totalled $100,000 at the end of 2015. Compute the return on equity (ROE) ratios for 2017 and 2016. (Round your answers to 1 decimal place.) Return on Equity 2017 % 2016 4-b. Is the trend going in the right direction? O No O Yes5-3. Net property and equipment totalled $116,000 at the end of 2015. Compute the xed asset turnover ratios for 2017 and 2016. {Round your answers to 2 decimal places.) -_ m 5-b. Is the trend going in the right direction? ONO OYes 6-3. Compute the debt-to-assets ratios for 2017 and 2015. {Round your answers to 2 decimal places.) 6-b. ls debt providing nancing for a larger or smaller proportion of the company's asset grown-I? 0 Larger proportion O Smaller proportion 7-3. Compute the times interest earned ratios for 201? and 2015. {Round your answers to 1 decimal place.) 7-b. Does the outcome of ratio in 2017 appears to be good or bad for the company? 0 Bad 0 Good 8-a. After Pinnacle Plus released its 2017 financial statements, the company's shares were trading at $36.50. After the release of its 2016 financial statements, the company's share price was $30.50 per share. Compute the P/E ratios for both years. (Round intermediate calculations to 2 decimal places and final answers to 1 decimal place.) Price/ Earnings 2017 2016 8-b. Does it appear that investors have become more (or less) optimistic about Pinnacle's future success? O Less optimistic O More optimistic
