The comparative financial statements prepared at December 31 for Golden Corporat

Question

The comparative financial statements prepared at December 31 for Golden Corporation showed the following summarized data Current Previous Income Statement Sales revenue Cost of goods sold $180,000 $165,000 10,000 100,000 Gross proft Operating expenses Interest expense 70,000 65,000 53,300 50,400 2,700 2,600 Income before income taxes Income tax expense 14,000 12.000 4,000 3,000 Net income S 10,000 $ 9,000 Balance Sheet Cash Accounts receivable (net) Inventory Property and equipment (net) $ 4,000 $ 8,000 19,000 23,000 40,000 35.000 45,000 38,000 $108,000 $104,000 Current liabilities Note payable (long-term) Common stock (par $5) Additional paid-in capital Retained earnings* $ 16,000 $ 19,000 45.000 45.000 30,000 30,000 5,000 12,000 5,000 5,000 $108,000 $104,000 During the current year, cash dividends of $3,000 were declared and paid. Required: 1-a. Compute the gross profit percentage for the current and previous years. (Round your answers to 1 decimal place.) ss Profit Percentage Current Year Previous Year 1-b. Are the current year results better, or worse, than those for the previous year? O Better O Worse 2-a. Compute the net profit margin for the current and previous years. (Round your answers to 1 decimal place.) Net Proft Margin Current Year Previous Year

Explanation / Answer

1a)

1b)Worse ,as profit margin has declined from previous year

2a)

5.6%

2b)

Better as Result has improved from previou year

3a)Number of shares outstanding =COmmon shares/ par value

= 30000/5 = 6000 shares

3b)Better ,as EPS has increased

4a)Current year equity =30000+5000+12000=47000

last year equity = 30000+5000+5000=40000

10000/43500

23%

9000/35000

25.7%

4b)Worse ,as ROE has decreased from last year

Formula current year previous Gross profit % Gross profit /sales 70000/180000 65000/165000 38.9% 39.4%

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.