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1. Compute the gross profit percentage for each year. Assuming the change from 2017 to 2018 is the beginning of a sustained trend, is Tiger likely to earn more or less gross profit from each dollar of sales in 2019? 2. Compute the net profit margin for each year. Did Tiger do a better or worse job of controlling expenses other than the costs of crude oil and products in 2018 relative to 2017? 3. Tiger reported average net fixed assets of $364 billion in 2018 and $362 billion in 2017. Compute the fixed asset turnover ratios for both years. Did the company better utilize its investment in fixed assets to generate revenues in 2018 or 2017? 4. Tiger reported average stockholders' equity of $174 billion in 2018 and $170 billion in 2017. The company has not issued preferred stock. Compute the return on equity ratios for both years. Did the company generate greater returns for stockholders in 2018 or 2017?

1. Compute the gross profit percentage for each year. Assuming the change from 2017 to 2018 is the beginning of a sustained trend, is Tiger likely to earn more or less gross profit from each dollar of sales in 2019? 2. Compute the net profit margin for each year. Did Tiger do a better or worse job of controlling expenses other than the costs of crude oil and products in 2018 relative to 2017? 3. Tiger reported average net fixed assets of $364 billion in 2018 and $362 billion in 2017. Compute the fixed asset turnover ratios for both years. Did the company better utilize its investment in fixed assets to generate revenues in 2018 or 2017? 4. Tiger reported average stockholders' equity of $174 billion in 2018 and $170 billion in 2017. The company has not issued preferred stock. Compute the return on equity ratios for both years. Did the company generate greater returns for stockholders in 2018 or 2017?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The average price of a gallon of gas in 2018 increased $0.30 (12.4 percent) from $2.42 in 2017 to $2.72 in 2018. Let's see whether these changes are reflected in the income statement of Tiger Industries for the year ended December 31, 2018 (amounts in billions). Revenues Costs of Purchased Crude Oil and Products Other Operating Costs Income before Income Tax Expense Income Tax Expense Net Income 2018 $ 239 137 72 30 9 $ 21 2017 $ 202 108 81 13 $13 Required: 1. Compute the gross profit percentage for each year. Assuming the change from 2017 to 2018 is the beginning of a sustained trend, is Tiger likely to earn more or less gross profit from each dollar of sales in 2019? 2. Compute the net profit margin for each year. Did Tiger do a better or worse job of controlling expenses other than the costs of crude oil and products in 2018 relative to 2017? 3. Tiger reported average net fixed assets of $364 billion in 2018 and $362 billion in 2017. Compute the fixed asset turnover ratios for both years. Did the company better utilize its investment in fixed assets to generate revenues in 2018 or 2017? 4. Tiger reported average stockholders' equity of $174 billion in 2018 and $170 billion in 2017. The company has not issued preferred stock. Compute the return on equity ratios for both years. Did the company generate greater returns for stockholders in 2018 or 2017?
Transcribed Image Text:The average price of a gallon of gas in 2018 increased $0.30 (12.4 percent) from $2.42 in 2017 to $2.72 in 2018. Let's see whether these changes are reflected in the income statement of Tiger Industries for the year ended December 31, 2018 (amounts in billions). Revenues Costs of Purchased Crude Oil and Products Other Operating Costs Income before Income Tax Expense Income Tax Expense Net Income 2018 $ 239 137 72 30 9 $ 21 2017 $ 202 108 81 13 $13 Required: 1. Compute the gross profit percentage for each year. Assuming the change from 2017 to 2018 is the beginning of a sustained trend, is Tiger likely to earn more or less gross profit from each dollar of sales in 2019? 2. Compute the net profit margin for each year. Did Tiger do a better or worse job of controlling expenses other than the costs of crude oil and products in 2018 relative to 2017? 3. Tiger reported average net fixed assets of $364 billion in 2018 and $362 billion in 2017. Compute the fixed asset turnover ratios for both years. Did the company better utilize its investment in fixed assets to generate revenues in 2018 or 2017? 4. Tiger reported average stockholders' equity of $174 billion in 2018 and $170 billion in 2017. The company has not issued preferred stock. Compute the return on equity ratios for both years. Did the company generate greater returns for stockholders in 2018 or 2017?
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