The comparative financial statements prepared at December 31 for Pinnacle Plus showed the following summarized data:
Current Year Previous Year Income Statement Sales Revenue $ 120,000 $ 107,000 Cost of Goods Sold 56,000 52,000 Gross Profit 64,000 55,000 Operating Expenses 38,000 34,600 Interest Expense 4,200 4,200 Income before Income Tax Expense 21,800 16,200 Income Tax Expense (30%) 6,540 4,860 Net Income $ 15,260 $ 11,340 Balance Sheet Cash $ 72,110 $ 36,000 Accounts Receivable, Net 19,000 14,000 Inventory 27,000 40,000 Property and Equipment, Net 97,000 107,000 Total Assets $ 215,110 $ 197,000 Accounts Payable $ 44,000 $ 34,800 Income Tax Payable 1,050 600 Note Payable (long-term) 42,000 42,000 Total Liabilities 87,050 77,400 Common Stock (par $10) 91,200 91,200 Retained Earnings† 36,860 28,400 Total Liabilities and Stockholders’ Equity $ 215,110 $ 197,000
† During the current year, cash dividends amounting to $6,800 were declared and paid.
1-a. Compute the gross profit percentage in the current and previous years
2-a. Compute the net profit margin for the current and previous years
3-a. Compute the earnings per share for the current and previous years.
4-a.Stockholders' equity totaled $102,000 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the current and previous years
5-a. Net property and equipment totaled $112,000 at the beginning of the previous year. Compute the fixed asset turnover ratios for the current and previous years.
6-a. Compute the debt-to-assets ratios for the current and previous years.
7-a. Compute the times interest earned ratios for the current and previous years.
8-a. After Pinnacle Plus released its current year's financial statements, the company's stock was trading at $20. After the release of its previous year's financial statements, the company's stock price was $17 per share. Compute the P/E ratios for both years
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