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ป 2.5 points eBook E13-4 (Algo) Computing Profitability Ratios [LO 13-4, LO 13-5] According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2018. Let's see whether these changes are reflected in the income statement of Inigo Peripherals for the year ended December 31, 2018. Sales Revenue Cost of Goods Sold Gross Profit Selling, General, and Administrative Expenses Interest Expense Income before Income Tax Expense Income Tax Expense 2018 2017 $ 104,000 $ 126,000 62,000 73,100 42,000 52,900 36,400 37,800 540 495. 5,060 1,000 14,605 5,400 $ 4,060 $ 9,205 Net Income Required: 1. Compute the gross profit percentage for each year. Assuming that the change from 2017 to 2018 is the beginning of a sustained trend, is Inigo likely to earn more or less gross profit from each dollar of sales in 2019? 2. Compute the net profit margin for each year. Given your calculations here and in requirement 1, explain whether Zigga did a better or worse job of controlling operating expenses in 2018 relative to 2017. 3. Inigo reported average net fixed assets of $54,600 in 2018 and $45,500 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. Inigo reported average stockholders' equity of $54,400 in 2018 and $41,200 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 than in 2017? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 2-a. Compute the net profit margin for each year. (Round percentage values to 1 decimal place.) 2-b. Did Inigo do a better or worse job of controlling operating expenses in 2018 relative to 2017? 2-a. 2017 2-a. 2018 % % 2-b. Controlling operating expenses in 2018 vs 2017? < Required 1 Required 3>

ป 2.5 points eBook E13-4 (Algo) Computing Profitability Ratios [LO 13-4, LO 13-5] According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2018. Let's see whether these changes are reflected in the income statement of Inigo Peripherals for the year ended December 31, 2018. Sales Revenue Cost of Goods Sold Gross Profit Selling, General, and Administrative Expenses Interest Expense Income before Income Tax Expense Income Tax Expense 2018 2017 $ 104,000 $ 126,000 62,000 73,100 42,000 52,900 36,400 37,800 540 495. 5,060 1,000 14,605 5,400 $ 4,060 $ 9,205 Net Income Required: 1. Compute the gross profit percentage for each year. Assuming that the change from 2017 to 2018 is the beginning of a sustained trend, is Inigo likely to earn more or less gross profit from each dollar of sales in 2019? 2. Compute the net profit margin for each year. Given your calculations here and in requirement 1, explain whether Zigga did a better or worse job of controlling operating expenses in 2018 relative to 2017. 3. Inigo reported average net fixed assets of $54,600 in 2018 and $45,500 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. Inigo reported average stockholders' equity of $54,400 in 2018 and $41,200 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 than in 2017? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 2-a. Compute the net profit margin for each year. (Round percentage values to 1 decimal place.) 2-b. Did Inigo do a better or worse job of controlling operating expenses in 2018 relative to 2017? 2-a. 2017 2-a. 2018 % % 2-b. Controlling operating expenses in 2018 vs 2017? < Required 1 Required 3>

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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ป 2.5 points eBook E13-4 (Algo) Computing Profitability Ratios [LO 13-4, LO 13-5] According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2018. Let's see whether these changes are reflected in the income statement of Inigo Peripherals for the year ended December 31, 2018. Sales Revenue Cost of Goods Sold Gross Profit Selling, General, and Administrative Expenses Interest Expense Income before Income Tax Expense Income Tax Expense 2018 2017 $ 104,000 $ 126,000 62,000 73,100 42,000 52,900 36,400 37,800 540 495. 5,060 1,000 14,605 5,400 $ 4,060 $ 9,205 Net Income Required: 1. Compute the gross profit percentage for each year. Assuming that the change from 2017 to 2018 is the beginning of a sustained trend, is Inigo likely to earn more or less gross profit from each dollar of sales in 2019? 2. Compute the net profit margin for each year. Given your calculations here and in requirement 1, explain whether Zigga did a better or worse job of controlling operating expenses in 2018 relative to 2017. 3. Inigo reported average net fixed assets of $54,600 in 2018 and $45,500 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. Inigo reported average stockholders' equity of $54,400 in 2018 and $41,200 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 than in 2017? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 2-a. Compute the net profit margin for each year. (Round percentage values to 1 decimal place.) 2-b. Did Inigo do a better or worse job of controlling operating expenses in 2018 relative to 2017? 2-a. 2017 2-a. 2018 % % 2-b. Controlling operating expenses in 2018 vs 2017? < Required 1 Required 3>
Transcribed Image Text:ป 2.5 points eBook E13-4 (Algo) Computing Profitability Ratios [LO 13-4, LO 13-5] According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2018. Let's see whether these changes are reflected in the income statement of Inigo Peripherals for the year ended December 31, 2018. Sales Revenue Cost of Goods Sold Gross Profit Selling, General, and Administrative Expenses Interest Expense Income before Income Tax Expense Income Tax Expense 2018 2017 $ 104,000 $ 126,000 62,000 73,100 42,000 52,900 36,400 37,800 540 495. 5,060 1,000 14,605 5,400 $ 4,060 $ 9,205 Net Income Required: 1. Compute the gross profit percentage for each year. Assuming that the change from 2017 to 2018 is the beginning of a sustained trend, is Inigo likely to earn more or less gross profit from each dollar of sales in 2019? 2. Compute the net profit margin for each year. Given your calculations here and in requirement 1, explain whether Zigga did a better or worse job of controlling operating expenses in 2018 relative to 2017. 3. Inigo reported average net fixed assets of $54,600 in 2018 and $45,500 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. Inigo reported average stockholders' equity of $54,400 in 2018 and $41,200 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 than in 2017? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 2-a. Compute the net profit margin for each year. (Round percentage values to 1 decimal place.) 2-b. Did Inigo do a better or worse job of controlling operating expenses in 2018 relative to 2017? 2-a. 2017 2-a. 2018 % % 2-b. Controlling operating expenses in 2018 vs 2017? < Required 1 Required 3>
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