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PA13-2 Analyzing Comparative Financial Statements Using Selected Ratlos [LO 13-4, LO 13-5] Pinnacle Plus declared and paid a cash dividend of $6.800 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information: Current Year Previous Year $120,00 56,00 64. eae 38, ese 4,200 21,800 6,54e $ 15,260 $1e7,800 52.000 55,800 34,600 4,200 16,200 4,860 $ 11,340 Income Statement Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Interest Expense Income before Income Tax Expense Income Tax Expense (30%) Net Income Balance Sheet Cash Accounts Receivable, Net Inventory Property and Equipment, Net Total Assets Accounts Payable Income Tax Payable Note Payable (long-term) Total Liabilities Common Stock (par $19) Retained Earnings Total Liabilities and Stockholders' Equity $ 72,118 19,888 27. eee 97, eae $215, 118 $ 44,000 1, ese 42,eae 87,85e 91,200 36,850 $215, 110 $36,800 14,600 40,000 1ez, ese $197,00 $ 34,800 6ee 42,ege 77,400 91,200 28,400 $197,800 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 $102,000 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 $112.000 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? 8. 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 Pinnacle Plus released its current year's financial statements, the company's stock was trading at $20. After the release of its previous year's financial statements, the company's stock price was $17 per share. Compute the P/E ratios for both years. Does it appear that investors have become more or less) optimistic about Pinnacle's future success

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