The comparative financial statements prepared at December 31 for Golden Corporat
ID: 2593499 • Letter: T
Question
The comparative financial statements prepared at December 31 for Golden Corporation showed the following summarized data:
Compute the gross profit percentage for the current and previous years. (Round your answers to 1 decimal place.)
Compute the net profit margin for the current and previous years. (Round your answers to 1 decimal place.)
Compute the earnings per share for the current and previous years.
TIP: To calculate EPS, use the balance in Common Stock to determine the number of shares outstanding. Common Stock equals the par value per share times the number of shares. (Round your answers to 2 decimal places.)
Stockholders’ equity totaled $33,600 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the current and previous years. (Round your answers to 1 decimal place.)
Net property and equipment totaled $38,000 at the beginning of the previous year. Compute the fixed asset turnover ratios for the current and previous years. (Round your answers to 2 decimal places.)
Compute the debt-to-assets ratios for the current and previous years. (Round your answers to 2 decimal places.)
Compute the times interest earned ratios for the current and previous years. (Round your answers to 1 decimal place.)
After Golden released its current year’s financial statements, the company’s stock was trading at $36. After the release of its previous year’s financial statements, the company’s stock price was $27 per share. Compute the P/E ratios for both years. (Round your intermediate calculations and final answers to 2 decimal places.)
The comparative financial statements prepared at December 31 for Golden Corporation showed the following summarized data:
Explanation / Answer
17780/6720*=2.65
*33600/5=6720
15000/6720*=2.23
*33600/5=6720
17780/33600*=52.9%
*(33600+33600)/2=33600
15000/33600*=44.6%
*(33600+33600)/2=33600
210000/47500*=4.42
*(44000+51000)/2=47500
189000/41000*=4.61
*(38000+44000)/2=41000
Formula Current year Previous year Which one is better 1a. Gross Margin%=Gross Profit/Revenue 88000/210000=41.9% 77000/189000=40.7% Current year gross profit is better than previous year 2a Net Profit Margin percentage=Net Income/Net sales 17780/210000=8.5% 15000/189000=7.9% Current year net profit is better than previous year 3a Earnings per share=Net Income – Preferred dividends/Weighted Average Number of Common Shares Outstanding17780/6720*=2.65
*33600/5=6720
15000/6720*=2.23
*33600/5=6720
current year results are better than those for the previous year 4a Return on stockholders’ equity= Net Income/stockholders’ equity17780/33600*=52.9%
*(33600+33600)/2=33600
15000/33600*=44.6%
*(33600+33600)/2=33600
current year results are better than those for the previous year 5a fixed asset turnover ratio=Net Sales/Average Total Asset210000/47500*=4.42
*(44000+51000)/2=47500
189000/41000*=4.61
*(38000+44000)/2=41000
current year results are worse than those for the previous year 6a Debt to Total Asset Ratio=Total Debt OR Total Liability/Total Assets (15500+51000)/126680=52.49 (23200+51000)119600=62.04 current year results are worse than those for the previous year 7a Times interest earned= Eaning before interest and Tax expense/Interest expense (88000-59300)/3300=8.7 (77000-55200)/3200=6.8 current year results are better than those for the previous year 8a Price earning ratio=current market price/earning per share 36/2.65=13.61 27/2.23=12.10