P12-2 Analyzing Comparative Financial Statements by Using Percentages and Selected Ratios L012-5, 12-6, 12-9 The comparative financial statements prepared at December 31, year 2, for Goldfish Company showed the following summarized data: Year 2 Year 1 Statement of Earnings Sales revenue Cost of sales Gross margin Operating expenses and interest expense Earnings before income taxes Income tax expense Net earnings Statement of Financial Position Cash Accounts receivable (net) Inventory Property, plant, and equipment (net) $265, 320* $225,000 207,760 175,000 57,560 50,000 42,720 38,100 14,840 11,900 3,860 2,900 $ 10,980 $ 9,000 Current liabilities (no interest) Non-current liabilities (10% interest) Common shares (6,000 shares) Retained earningst $ 4,730 18, 290 46,780 44,340 $114,140 $ 15,090 41,970 30,000 27,080 $114,140 $ 9,500 22,000 41,000 37,500 $110,000 $ 18, 200 38,000 30,000 23,800 $110,000 *One-third was credit sales. During Year 2, cash dividends amounting to $7,700 were declared and paid. Required: 1. Present component percentages for Year 2 only. (Input all amounts as positive values. Round the final answers to the nearest whole percent. Percentages may not add exactly due to rounding.) Answer is complete and correct. Component Percentages Year 2 100 78 % % % 22 16 % 6 % 1 % % 5 Statement of earnings: Sales revenue Cost of sales Gross margin Operating expenses and interest expense Earnings before income taxes Income tax expense Net earnings Statement of financial position: Cash Accounts receivable (net) Inventory Property, plant, and equipment (net) Total assets Current liabilities Long-term liabilities Common shares Retained earnings Total liabilities and shareholders' equity 4 % 16 % 41 % 39 % 100 % 13 % 37 % 26 % 24 % 100 % OO NOWS 2-f. Return on assets. Assume that long-term debt increased to $41,970 in month 1 of year 2. (Round intermediate calculations to 3 decimal places and percentage answer to 2 decimal places (i.e., 0.1243 should be entered as 12.43).) Return on assets % 2-g. Return on equity. (Round percentage answer to 2 decimal places (i.e., 0.1243 should be entered as 12.43).) Return on equity 2-h. Financial leverage percentage. Did borrowing from creditors benefit shareholders? (Round intermediate calculations and final answer to 2 decimal places.) Financial leverage percentage % Yes