a. (*) What is Dulaney's current profit margin? What is its current yearly ROA? b. (**) Suppose COGS and merchandise inventory were each cut by 10%. What would be the new pretax profit margin and ROA? c. (**) Based on the current profit margin, how much additional sales would Dulaney have to generate in order to have the same effect on pretax earnings as a 10% decrease in merchandise costs?

a. (*) What is Dulaney's current profit margin? What is its current yearly ROA? b. () Suppose COGS and merchandise inventory were each cut by 10%. What would be the new pretax profit margin and ROA? c. () Based on the current profit margin, how much additional sales would Dulaney have to generate in order to have the same effect on pretax earnings as a 10% decrease in merchandise costs?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 15BEA: Last year, Nikkola Company had net sales of 2,299,500,000 and cost of goods sold of 1,755,000,000....

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