Use the data given in CP13-1 for Golden Corporation.

Required:

1. Compute the gross profit percentage for 2017 and 2016. Round the percentages to one decimal place. Is the trend going in the right direction?

2. Compute the net profit margin for 2017 and 2016. Round the percentages to one decimal place. Is the trend going in the right direction?

3. Compute the earnings per share for 2017 and 2016. Does the trend look good or bad? Explain.

TIP: To calculate EPS, use the balance in Common Shares to determine the number of shares outstanding. Common Shares equals the par value per share times the number of shares.

4. Shareholders? equity totalled $30,000 at the end of 2015. Compute the return on equity (ROE) ratios for 2016 and 2017. Express the ROE as percentages rounded to one decimal place. Is the trend going in the right direction?

5. Net property and equipment totalled $35,000 at the end of 2015. Compute the fixed asset turnover ratios for 2017 and 2016. Round the ratios to two decimal places. Is the trend going in the right direction?

6. Compute the debt-to-assets ratios for 2017 and 2016. 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 2017 and 2016. Round the ratios to one decimal place. Do they look good or bad? Explain.

8. After Golden released its 2017 financial statements, the company?s shares were trading at $30. After the release of its 2016 financial statements, the company?s share 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?

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Increase (Decrease) 2014 over 2013 2017 2016 Percentage Amount Income Statement $ 165,000 $ 180,000 Sales revenue Cost of goods sold 110,000 100,000 Gross profit 70,000 65,000 50,400 Operating expenses 53,300 Interest expense 2,700 2,600 Income before income taxes 14,000 12,000 Income tax expense 4,000 3,000 $ 10,000 $ 9,000 Net income Balance Sheet $ 4,000 $ 8,000 Cash Accounts receivable (net) 19,000 23,000 Inventory 40,000 35,000 Property and equipment (net) 45,000 38,000 $ 108,000 $ 104,000 $ 19,000 $ 16,000 Current liabilities (no interest) 45,000 45,000 Long-term liabilities (6% interest) Common shares (par $5) 30,000 30,000 Additional paid-in capital 5,000 5,000 Retained earnings 12,000 5,000 $ 108,000 $ 104,000