Use the data given in PA13-1 for Pinnacle Plus.

Required:
1. Compute the gross profit percentage in 2013 and 2012. Round the percentages to one decimal place. Is the trend going in the right direction?
2. Compute the net profit margin for 2013 and 2012. Round the percentages to one decimal place. Is the trend going in the right direction?
3. Compute the earnings per share for 2013 and 2012. Does the trend look good or bad? Explain.
4. Stockholders' equity totaled $100,000 at the end of 2011. Compute the return on equity (ROE) ratios for 2013 and 2012. Express the ROE as percentages rounded to one decimal place. Is the trend going in the right direction?
5. Net property and equipment totaled $110,000 at the end of 2011. Compute the fixed asset turnover  ratios for 2013 and 2012. Round the ratios to two decimal places. Is the trend going in the right direction?
6. Compute the debt-to-assets ratios for 2013 and 2012. Round the ratios to two decimal places. Is debt providing financing for a larger or smaller proportion of the company's asset growth? Explain.
7. Compute the times interest earned ratios for 2013 and 2012. Round the ratios to one decimal place. Do they look good or bad? Explain.
8. After Pinnacle Plus released its 2013 financial statements; the company's stock was trading at $18. After the release of its 2012 financial statements, the company's stock price was $15 per share. Compute the P/E ratios for both years, rounded to one decimal place. Does it appear that investors have become more (or less) optimistic about Pinnacle's future success?

Transcribed Image Text:

Increase (Decrease) in 2013 (versus 2012) 2013 2012 Amount Percentage 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 $110,000 99,000 48,000 51,000 33,000 4,000 14,000 4,200 12,600 $9,800 52,000 58,000 36,000 4,000 18,000 5,400 as Accounts Receivable, Net Inventory Property and Equipment, Net Total Assets 49,500 18,000 32,000 38,000 105,000 $206,500 $193,000 37,000 25,000 95,000 Accounts Payable Income Tax Payable Note Payable, Long-term Total Liabilities Common Stock (par $10) Retained Earnings Total Liabilities and Stockholders' Equity $ 42,000 35,000 500 40,000 75,500 90,000 27,500 $206,500 $193,000 1,000 40,000 83,000 90,000 33,500