Use the information in E13-3 to complete the following requirements.

Required:

1. Compute the gross profit percentage for each year (rounded to one decimal place). Assuming that the change for 2016 to 2017 is the beginning of a sustained trend, is Computer Tycoon likely to earn more or less gross profit from each dollar of sales in 2018?

2. Compute the net profit margin for each year (expressed as a percentage with one decimal place). Given your calculations here and in requirement 1, explain whether Computer Tycoon did a better or worse job of controlling operating expenses in 2017 relative to 2016.

3. Computer Tycoon reported average net fixed assets of $54,200 in 2017 and $45,100 in 2016. Compute the fixed asset turnover ratios for both years (rounded to two decimal places). Did the company better utilize its investment in fixed assets to generate revenues in 2017 or 2016.

4. Computer Tycoon reported average shareholders? equity of $54,000 in 2017 and $40,800 in 2016. Compute the return on equity ratios for both years (expressed as a percentage with one decimal place). Did the company generate greater returns for shareholders in 2017 than in 2016?

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2017 2016 $98,913 $121,761 Sales Revenues Cost of Goods Sold 59,249 71,583 Gross Profit 39,664 50,178 36,934 Selling, General, and Administrative Expenses 36,943 Interest Expense 565 474 Income Before Income Tax Expense 2,156 12,770 1,024 Income Tax Expense 5,540 $ 1,132 $ 7,230 Net Income