Return on investment = O Average operating assets ÷ Net operating income O Net operating income Segment revenue Segment revenue ÷ Net operating income O Net operating income ÷ Average operating assets
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- d. Calculate the Efficiency ratio which includes the sales to total assets ratio, operating return on assets, return on assets, ROA Model, return on equity, and ROE ModelWhich of the following is true? a. Return on Investment equals Margin divided by Average Operating Assets b. Turnover equals Sales divided by Stockholders Equity c. Margin equals Return on Investment divided by Turnover d. Return on Investment equals Margin divided by Turnover.REQUIRED: • Vertical Analysis • Comment on the efficiency of the firm's operation using- asset turnover, inventory turnover, and, earnings per share • Comment on the proportion of cost of sales and operating expenses
- Discuss the impact of the following ratios and usefulness to users of financial statements. Gross profit Margin Return on capital employed Operating profit (PBIT) percentage Asset turnover Gearing ratioIn the DuPont system, the return on total assets (asset) is equal to (return on equity) × (financial leverage multiplier). (net profit margin) × (fixed asset turnover). (return on equity) × (total asset turnover). (net profit margin) × (total asset turnover).Based on the income statement given calculate and explain the :profitability ratioa. Gross profit ratio = gross profit/net salesb. Operating margin ratio =operating income/net salesc. Asset Turnover ratio = net sales / total assetsd. Return on equity ratio = net sales/ shareholders equity Leverage ratioa. interest coverage ratio =operating income / interest expenses
- The investment turnover is the ratio of a. operating income to sales b. sales to invested assets c. operating income to invested assets d. assets to liabilitiesThe return on total assets measures A. profitability by combining the effects of the profit margin and asset turnover. B.how efficiently a company uses its assets to generate sales. C.efficiency, profitability, and liquidity. D.liquidity.Interpret the results: • Return on equity • Return on assets • Gross profit margin • Operating profit margin • Net profit margin
- In a DuPont analysis, what are the components of return on assets?a. Net Profit Margin Ratio and Debt Ratiob. Net Profit Margin Ratio and Leverage Ratioc. Net Profit Margin Ratio and Asset Turnover Ratiod. Asset Turnover Ratio and Leverage RatioI Current ratioli. Times interest earnedjli. Inventory turnover¡v. Total asset turnoverv. Operating profit marginVi. Debt ratiovi. Average collection periodVii Fixed asset turnoverixReturn on equityWhat does ROE depend on according to the DuPont raito? Profit Margin Asset Turnover Equity Multiplier All of the above
