Use the data given in CP13- 1 for Golden Corporation.
Required:
1. Compute the gross profit percentage for the current and previous years. Round the percent-ages to one decimal place. 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. Round the percentages to one decimal place. 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 $ 30,000 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the current and previous years. Express the ROE as percentages rounded to one decimal place. Are the current year results better, or worse, than those for the previous year?
5. Net property and equipment totaled $ 35,000 at the beginning of the previous year. Compute the fixed asset turnover ratios for the current and previous years. Round the ratios to two decimal places. Are the current year results better, or worse, than those for the previous year?
6. Compute the debt- to- assets ratios for the current and previous years. 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 the current and previous years. Round the ratios to one decimal place. Are the current year results better, or worse, than those for the previous year? Explain.
8. After Golden released its current year’s financial statements, the company’s stock was trading at $ 30. After the release of its previous year’s financial statements, the company’s stock price was $ 21 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 Golden’s future success?