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) $324,420* 272,590 51,830 35,110 16,720 5,130 $ 11,590 $275,000 230,000 45,000 31,600 13,400 3,900 $ 9,500 $ 4,480 19,120 54,760 36,650 $ 115,010 $ 10,760 39,660 42,000 22,590 $ 115,010 $ 9,000 23,000 48,000 31,000 $ 111,000 $ 13,000 38,600 42,000 17,400 $111,000 Current liabilities (no interest) Non-current liabilities (10% interest) Common shares (6,000 shares) Retained earningst *One-third was credit sales. During Year 2, cash dividends amounting to $6,400 were declared and paid. 2-f. Return on assets. Assume that long-term debt increased to $39,660 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).) Answer is complete but not entirely correct. Return on assets 10.26 X % 2-9. Return on equity. (Round percentage answer to 2 decimal places (i.e., 0.1243 should be entered as 12.43).) Answer is complete and correct. Return on equity 18.70% 2-h. Financial leverage percentage. Did borrowing from creditors benefit shareholders? (Round intermediate calculations and final answer to 2 decimal places.) Answer is complete but not entirely correct. Financial leverage percentage 3.10 X % Yes