1. Compute the gross profit percentage in the current and previous years. Are the current-year results better, or worse, than those for the previous year? 2. Compute the net profit margin for the current and previous years. Are the current-year results better, or worse, than those for the previous year? 3. Compute the earnings per share for the current and previous years. Are the current-year results better, or worse, than those for the previous year?

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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Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
Required 4
Required 5
Required 6
Required 7
Required 8
1-a. Compute the gross profit percentage in the current and previous years. (Round percentage values to 1 decimal place.)
1-b. Are the current-year results better, or worse, than those for the previous year?
1-a. Current Year
%
1-a. Previous Year
%
1-b. Current year gross profit percentage?
< Required 1
Required 2 >
Transcribed Image Text:Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 1-a. Compute the gross profit percentage in the current and previous years. (Round percentage values to 1 decimal place.) 1-b. Are the current-year results better, or worse, than those for the previous year? 1-a. Current Year % 1-a. Previous Year % 1-b. Current year gross profit percentage? < Required 1 Required 2 >
Strider Outfitters declared and paid a cash dividend of $8,900 in the current year. Its comparative financial statements, prepared at
December 31, reported the following summarized information:
Current Year Previous Year
Income Statement
$ 225,000
98,000
127,000
59,000
6,300
$ 191,000
94,000
Sales Revenue
Cost of Goods Sold
Gross Profit
97,000
51,400
6,300
Operating Expenses
Interest Expense
Income before Income Tax Expense
Income Tax Expense (30%)
61,700
18,510
39,300
11,790
$ 43,190
$ 27,510
Net Income
Balance Sheet
$ 99,515
40,000
48,000
118,000
$ 15,000
35,000
61,000
128,000
Cash
Accounts Receivable, Net
Inventory
Property and Equipment, Net
$ 305,515
$ 65,000
$ 239,000
$ 32,700
Total Assets
Accounts Payable
Income Tax Payable
Notes Payable (long-term)
1,575
63,000
129,575
103,800
72,140
1,650
63,000
97,350
103,800
37,850
$ 239,000
Total Liabilities
Common Stock (par $10)
Retained Earnings
Total Liabilities and Stockholders' Equity
$ 305,515
Required:
1. Compute the gross profit percentage in the current and previous years. Are the current-year results better, or worse, than those for
the previous year?
2. Compute the net profit margin for the current and previous years. Are the current-year results better, or worse, than those for the
previous year?
3. Compute the earnings per share for the current and previous years. Are the current-year results better, or worse, than those for the
previous year?
4. Stockholders' equity totaled $123,000 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the
current and previous years. Are the current-year results better, or worse, than those for the previous year?
5. Net property and equipment totaled $133,000 at the beginning of the previous year. Compute the fixed asset turnover ratios for the
current and previous years. Are the current-year results better, or worse, than those for the previous year?
6. Compute the debt-to-assets ratios for the current and previous years. Is debt providing financing for a larger or smaller proportion of
the company's asset growth?
7. Compute the times interest earned ratios for the current and previous years. Are the current-year results better, or worse, than those
for the previous year?
8. After Strider Outfitters released its current year's financial statements, the company's stock was trading at $41. After the release of
its previous year's financial statements, the company's stock price was $38 per share. Compute the P/E ratios for both years. Does it
appear that investors have become more (or less) optimistic about Strider's future success?
Transcribed Image Text:Strider Outfitters declared and paid a cash dividend of $8,900 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information: Current Year Previous Year Income Statement $ 225,000 98,000 127,000 59,000 6,300 $ 191,000 94,000 Sales Revenue Cost of Goods Sold Gross Profit 97,000 51,400 6,300 Operating Expenses Interest Expense Income before Income Tax Expense Income Tax Expense (30%) 61,700 18,510 39,300 11,790 $ 43,190 $ 27,510 Net Income Balance Sheet $ 99,515 40,000 48,000 118,000 $ 15,000 35,000 61,000 128,000 Cash Accounts Receivable, Net Inventory Property and Equipment, Net $ 305,515 $ 65,000 $ 239,000 $ 32,700 Total Assets Accounts Payable Income Tax Payable Notes Payable (long-term) 1,575 63,000 129,575 103,800 72,140 1,650 63,000 97,350 103,800 37,850 $ 239,000 Total Liabilities Common Stock (par $10) Retained Earnings Total Liabilities and Stockholders' Equity $ 305,515 Required: 1. Compute the gross profit percentage in the current and previous years. Are the current-year results better, or worse, than those for the previous year? 2. Compute the net profit margin for the current and previous years. Are the current-year results better, or worse, than those for the previous year? 3. Compute the earnings per share for the current and previous years. Are the current-year results better, or worse, than those for the previous year? 4. Stockholders' equity totaled $123,000 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the current and previous years. Are the current-year results better, or worse, than those for the previous year? 5. Net property and equipment totaled $133,000 at the beginning of the previous year. Compute the fixed asset turnover ratios for the current and previous years. Are the current-year results better, or worse, than those for the previous year? 6. Compute the debt-to-assets ratios for the current and previous years. Is debt providing financing for a larger or smaller proportion of the company's asset growth? 7. Compute the times interest earned ratios for the current and previous years. Are the current-year results better, or worse, than those for the previous year? 8. After Strider Outfitters released its current year's financial statements, the company's stock was trading at $41. After the release of its previous year's financial statements, the company's stock price was $38 per share. Compute the P/E ratios for both years. Does it appear that investors have become more (or less) optimistic about Strider's future success?
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