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 from 2009 to 2010 is the beginning of a sustained trend, is Computer Tycoon likely to earn more or less gross profit from each dollar of sales in 2011?
2. Compute the net profit margin for each year (expressed as a percentage with one deci-mal place). Given your calculations here and in requirement 1, explain whether Computer Tycoon did a better or worse job of controlling operating expenses in 2010 relative to 2009.
3. Computer Tycoon reported average net fixed assets of $54,200 in 2010 and $45,100 in
2009. Compute the fixed asset turnover ratios for both years (round to two decimal places).
Did the company better utilize its investment in fixed assets to generate revenues in 2010 or 2009?
4. Computer Tycoon reported average stockholders€™ equity of $54,000 in 2010 and $40,800 in 2009. Compute the return on equity ratios for both years (expressed as a percentage with one decimal place). Did the company generate greater returns for stockholders in 2010 than in2009?

Transcribed Image Text:

2010 2009 Sales Revenue Cost of Goods Sold Gross Profit Selling, General, and Administrative Expenses Interest Expense Income before Income Tax Expense Income Tax Expense Net Income $100,000 60,000 40,000 36,000 500 3,500 1,000 $ 2,500 $120,000 71,500 48,500 37,000 475 11,025 5,000 $ 6,025