The comparative financial statements prepared at December 31, year 2, for Goldfish Company showed the following summarized data: Year 2 Year 1 Statement of Earnings Sales revenue Cost of sales Gross margin Operating expenses and interest expense Earnings before income taxes Income tax expense Net earnings Statement of Financial Position Cash Accounts receivable (net) Inventory Property, plant, and equipment (net) $ 265, 320* $225,000 207,760 175,000 57,560 50,000 42,720 38,100 14,840 11,900 3,860 2,900 $ 10,980 $ 9,000 $ 4,730 18, 290 46,780 44,340 $ 114,140 $ 15,090 41,970 30,000 27,080 $ 114,140 $ 9,500 22,000 41,000 37,500 $110,000 $ 18,200 38,000 30,000 23,800 $110,000 Current liabilities (no interest) Non-current liabilities (10% interest) Common shares (6,000 shares) Retained earningst *One-third was credit sales. During Year 2, cash dividends amounting to $7,700 were declared and paid. Required: 1. Present component percentages for Year 2 only. (Input all amounts as positive values. Round the final answers to the nearest whole percent. Percentages may not add exactly due to rounding.) Answer is complete and correct. Component Percentages Year 2 Statement of earnings: Sales revenue 100 % 78 % 22 % 16 % 6 % 1 % 5 % Cost of sales Gross margin Operating expenses and interest expense Earnings before income taxes Income tax expense Net earnings Statement of financial position: Cash Accounts receivable (net) Inventory Property, plant, and equipment (net) Total assets 4 % 16 % 41 % 39 % 100 % 13 % 37 % Current liabilities Long-term liabilities Common shares Retained earnings Total liabilities and shareholders' equity 26 % 24 % 100 % Compute the following for year 2: 2-a. Percentage markup on sales. (Round percentage answer to 1 decimal place (i.e., 0.124 should be entered as 12.4).) Answer is complete and correct. Average percentage 21.7 % 2-b. Income tax rate. (Round percentage answer to 1 decimal place (i.e., 0.124 should be entered as 12.4).) Answer is complete and correct. Average income tax 26.0% 2-c. Net profit margin ratio. Was it a good or poor indicator of performance? (Round percentage answer to 2 decimal places (i.e., 0.1243 should be entered as 12.43).) Answer is complete and correct. Net profit margin ratio 4.14 % Poor 2-d. Percentage of total resources invested in property, plant, and equipment. (Round percentage answer to 2 decimal places (i.e., 0.1243 should be entered as 12.43).) Answer is complete and correct. Percentage 38.85 % 2-e. Debt-to-equity ratio. Interpret the result. (Round the final answer to 2 decimal places.) Answer is not complete. Debt-to-equity ratio Bad 2-f. Return on assets. Assume that long-term debt increased to $41,970 in month 1 of year 2. (Round intermediate calculations to 3 decimal places and percentage answer to 2 decimal places (i.e., 0.1243 should be entered as 12.43).) Answer is complete and correct. Return on assets 12.57 % 2-9. Return on equity. (Round percentage answer to 2 decimal places (i.e., 0.1243 should be entered as 12.43).) Return on equity % 2-h. Financial leverage percentage. Did borrowing from creditors benefit shareholders? (Round intermediate calculations and final answer to 2 decimal places.) X Answer is not complete. Financial leverage percentage % Yes
