Pinnacle Plus declared and paid a cash dividend of $6,600 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information: I am not sure how to find the right numbers to go in the equation. CurrentPreviousYearYearIncome Statement$110,00052,00058,00036,0004,00018,0005,400$ 12,600$ 99,00048,00051,00033,0004,00014,0004, 200$ 9,800Sales RevenueCost of Goods SoldGross ProfitOperating ExpensesInterest ExpenseIncome before Income Tax ExpenseIncome Tax Expense (30%)Net IncomeBalance Sheet$ 69,50017,00025,00095,000$206,500$ 38,00012,00038,000105,000CashAccounts Receivable, NetInventoryProperty and Equipment, NetTotal Assets$193,000Accounts PayableIncome Tax PayableNote Payable (long-term)$ 42,0001,00040,00083,00090,00033,500$206,500$ 35,00050040,00075,50090,00027,500Total LiabilitiesCommon Stock (par $10)Retained EarningsTotal Liabilities and Stockholders' Equity$193,000 1. Compute the gross profit percentage in the current and previous years. Are the current year results better, orworse, than those for the previous year?2. Compute the net profit margin for the current and previous years. Are the current year results better, orworse, than those for the previous year?3. Compute the earnings per share for the current and previous years. Are the current year results better, orworse, than those for the previous year?4. Stockholders' equity totaled $100,000 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 forthe previous year?5. Net property and equipment totaled $110,000 at the beginning of the previous year. Compute the fixed assetturnover ratios for the current and previous years. Are the current year results better, or worse, than thosefor the previous year?5. Compute the debt-to-assets ratios for the current and previous years. Is debt providing financing for a largeror 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 resultsbetter, or worse, than those for the previous year?3. After Pinnacle Plus released its current year's financial statements, the company's stock was trading at $18.After the release of its previous year's financial statements, the company's stock price was $15 per share.Compute the P/E ratios for both years. Does it appear that investors have become more (or less) optimisticabout Pinnacle's future success?

“Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for you. To get remaining sub-parts solved please re-post the complete question and mention the sub-parts to be solved. ”Gross profit percentage tells about the company’s efficiency in regards of manufacturing and production. Net profit percentage discuss about the remaining profit after deduction all cost from the sales. Earning per share (EPS) defines the share of profits each stockholders would get after paying off dividends.Gross profit percentage = (Gross profit / total revenue)*100 For previous year Gross profit = $51,000 , Total revenue = $99,000 Gross profit percentage = (51,000 / 99,000) * 100 = 51.51% For current year Gross profit = $58,000 , Total revenue = $ 110,000 Gross profit percentage = (58000 / 110,000) *100 = 52.73% As the gross profit percentage increases in current year, so the current year results for gross profits percentage are better than those of previous years. Net profit percentage = (Net Income / Total revenue) *100 For previous year Net income = $9,800 , Total revenue = $99,000 Net profit percentage = (9,800 / 99000) *100 = 9.90% For current year Net income = $12,600 , Total revenue = $110,000 Net profit percentage = (12,600 / 110,000)*100 = 11.45% As the net profit percentage increases in current year, so the current year results for net profit percentage are better than as compared to previous year. Earning per share =( Net income – dividend paid ) / no. of shares For Current Year No. of shares = $90,000 / $10 = 9000 Net income = $9,800 , Dividend paid = $6,600 Earning per share = (12600 – 9600 ) / 9000 = $0.33/ share

Business

Accounting

Current Previous Year Year Income Statement Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Interest Expense Income before Income Tax Expense Income Tax Expense (30%) $110,000 52,000 58,000 36,000 4,000 18,000 5,400 $ 99,000 48,000 51,000 33,000 4,000 14,000 4, 200 Net Income $ 12,600 $ 9,800 Balance Sheet Cash Accounts Receivable, Net Inventory Property and Equipment, Net $ 69,500 17,000 25,000 95,000 $206,500 $ 38,000 12,000 38,000 105,000 Total Assets $193,000 Accounts Payable Income Tax Payable Note Payable (long-term) $ 42,000 1,000 40,000 83,000 90,000 33,500 $206,500 $ 35,000 500 40,000 Total Liabilities Common Stock (par $10) Retained Earnings Total Liabilities and Stockholders' Equity 75,500 90,000 27,500 $193,000

Current Previous Year Year Income Statement Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Interest Expense Income before Income Tax Expense Income Tax Expense (30%) $110,000 52,000 58,000 36,000 4,000 18,000 5,400 $ 99,000 48,000 51,000 33,000 4,000 14,000 4, 200 Net Income $ 12,600 $ 9,800 Balance Sheet Cash Accounts Receivable, Net Inventory Property and Equipment, Net $ 69,500 17,000 25,000 95,000 $206,500 $ 38,000 12,000 38,000 105,000 Total Assets $193,000 Accounts Payable Income Tax Payable Note Payable (long-term) $ 42,000 1,000 40,000 83,000 90,000 33,500 $206,500 $ 35,000 500 40,000 Total Liabilities Common Stock (par $10) Retained Earnings Total Liabilities and Stockholders' Equity 75,500 90,000 27,500 $193,000

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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