Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 44

Analyzing Comparative Financial Statements Using Selected Ratios
Use the data given in CP13-1 for Golden Corporation.
Required:
1. Compute the gross profit percentage for 2013 and 2012. Round the percentages to one decimal place. Is the trend going in the right direction
2. Compute the net profit margin for 2013 and 2012. Round the percentages to one decimal place. Is the trend going in the right direction
3. Compute the earnings per share for 2013 and 2012. Does the trend look good or bad Explain.
TIP: To calculate EPS, use the balance in Common Stock to determine the number of shares outstanding. Common Stock equals the par value per share times the number of shares.
4. Stockholders' equity totaled $30,000 at the end of 2011. Compute the return on equity (ROE) ratios for 2012 and 2013. Express the ROE as percentages rounded to one decimal place. Is the trend going in the right direction
5. Net property and equipment totaled $35,000 at the end of 2011. Compute the fixed asset turnover ratios for 2013 and 2012. Round the ratios to two decimal places. Is the trend going in the right direction
6. Compute the debt-to-assets ratios for 2013 and 2012. Round the ratios to two decimal places. Is debt providing financing for a larger or smaller proportion of the company's asset growth Explain.
7. Compute the times interest earned ratios for 2013 and 2012. Round the ratios to one decimal place. Do they look good or bad Explain.
8. After Golden released its 2013 financial statements, the company's stock was trading at $30. After the release of its 2012 financial statements, the company's stock price was $21 per share. Compute the P/E ratios for both years, rounded to one decimal place. Does it appear that investors have become more (or less) optimistic about Golden's future success