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Current Previous Year Year Income Statement Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Interest Expense Income before Income Tax Expense Income Tax Expense (30%) $110,000 52,000 58,000 36,000 4,000 18,000 5,400 $ 99,000 48,000 51,000 33,000 4,000 14,000 4, 200 Net Income $ 12,600 $ 9,800 Balance Sheet Cash Accounts Receivable, Net Inventory Property and Equipment, Net $ 69,500 17,000 25,000 95,000 $206,500 $ 38,000 12,000 38,000 105,000 Total Assets $193,000 Accounts Payable Income Tax Payable Note Payable (long-term) $ 42,000 1,000 40,000 83,000 90,000 33,500 $206,500 $ 35,000 500 40,000 Total Liabilities Common Stock (par $10) Retained Earnings Total Liabilities and Stockholders' Equity 75,500 90,000 27,500 $193,000

Current Previous Year Year Income Statement Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Interest Expense Income before Income Tax Expense Income Tax Expense (30%) $110,000 52,000 58,000 36,000 4,000 18,000 5,400 $ 99,000 48,000 51,000 33,000 4,000 14,000 4, 200 Net Income $ 12,600 $ 9,800 Balance Sheet Cash Accounts Receivable, Net Inventory Property and Equipment, Net $ 69,500 17,000 25,000 95,000 $206,500 $ 38,000 12,000 38,000 105,000 Total Assets $193,000 Accounts Payable Income Tax Payable Note Payable (long-term) $ 42,000 1,000 40,000 83,000 90,000 33,500 $206,500 $ 35,000 500 40,000 Total Liabilities Common Stock (par $10) Retained Earnings Total Liabilities and Stockholders' Equity 75,500 90,000 27,500 $193,000

Fundamentals of Financial Management (MindTap Course List)
Fundamentals of Financial Management (MindTap Course List)
15th Edition
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter4: Analysis Of Financial Statements
Section: Chapter Questions
Problem 24P: Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of...
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Pinnacle Plus declared and paid a cash dividend of $6,600 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information: 

I am not sure how to find the right numbers to go in the equation.

Current Previous Year Year Income Statement $110,000 52,000 58,000 36,000 4,000 18,000 5,400 $ 12,600 $ 99,000 48,000 51,000 33,000 4,000 14,000 4, 200 $ 9,800 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 $ 69,500 17,000 25,000 95,000 $206,500 $ 38,000 12,000 38,000 105,000 Cash Accounts Receivable, Net Inventory Property and Equipment, Net Total Assets $193,000 Accounts Payable Income Tax Payable Note Payable (long-term) $ 42,000 1,000 40,000 83,000 90,000 33,500 $206,500 $ 35,000 500 40,000 75,500 90,000 27,500 Total Liabilities Common Stock (par $10) Retained Earnings Total Liabilities and Stockholders' Equity $193,000
Transcribed Image Text:Current Previous Year Year Income Statement $110,000 52,000 58,000 36,000 4,000 18,000 5,400 $ 12,600 $ 99,000 48,000 51,000 33,000 4,000 14,000 4, 200 $ 9,800 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 $ 69,500 17,000 25,000 95,000 $206,500 $ 38,000 12,000 38,000 105,000 Cash Accounts Receivable, Net Inventory Property and Equipment, Net Total Assets $193,000 Accounts Payable Income Tax Payable Note Payable (long-term) $ 42,000 1,000 40,000 83,000 90,000 33,500 $206,500 $ 35,000 500 40,000 75,500 90,000 27,500 Total Liabilities Common Stock (par $10) Retained Earnings Total Liabilities and Stockholders' Equity $193,000
1. Compute the gross profit percentage in the current and previous years. Are the current year results better, or worse, than those for the previous year? 2. Compute the net profit margin for the current and previous years. Are the current year results better, or worse, than those for the previous year? 3. Compute the earnings per share for the current and previous years. Are the current year results better, or worse, than those for the previous year? 4. Stockholders' equity totaled $100,000 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 5. Net property and equipment totaled $110,000 at the beginning of the previous year. Compute the fixed asset turnover ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 5. Compute the debt-to-assets ratios for the current and previous years. Is debt providing financing for a larger or smaller proportion of the company's asset growth? 7. Compute the times interest earned ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 3. After Pinnacle Plus released its current year's financial statements, the company's stock was trading at $18. After the release of its previous year's financial statements, the company's stock price was $15 per share. Compute the P/E ratios for both years. Does it appear that investors have become more (or less) optimistic about Pinnacle's future success?
Transcribed Image Text:1. Compute the gross profit percentage in the current and previous years. Are the current year results better, or worse, than those for the previous year? 2. Compute the net profit margin for the current and previous years. Are the current year results better, or worse, than those for the previous year? 3. Compute the earnings per share for the current and previous years. Are the current year results better, or worse, than those for the previous year? 4. Stockholders' equity totaled $100,000 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 5. Net property and equipment totaled $110,000 at the beginning of the previous year. Compute the fixed asset turnover ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 5. Compute the debt-to-assets ratios for the current and previous years. Is debt providing financing for a larger or smaller proportion of the company's asset growth? 7. Compute the times interest earned ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 3. After Pinnacle Plus released its current year's financial statements, the company's stock was trading at $18. After the release of its previous year's financial statements, the company's stock price was $15 per share. Compute the P/E ratios for both years. Does it appear that investors have become more (or less) optimistic about Pinnacle's future success?
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