(a)
Introduction:
Gross profit percentage helps the company to compare gross margin to the net sales. This ratio tells the profitability at which company sells its inventory.
To calculate:
The gross profit percentage for 2012 and 2013 and comment on the same.
(b)
Introduction:
Profit margin ratio is calculated by dividing net income by the net sales. It helps in calculating the net income as a percentage of revenue.
To calculate:
The net profit margin for 2012 and 2013 and compare company could control its operating expenses from 2012 to 2013.
(c)
Introduction:
Asset turnover ratio calculates the ability of a company to generate sales with the fixed assets. A decline in the ratio means company has overinvested the amount in the fixed assets.
To calculate:
The fixed asset turnover ratio for 2013 and 2012 and comment on the same.
(d)
Introduction:
Return on equity measures the effectiveness with which a company create profits using its assets. It is a part of the profitability ratio that measures the amount of profit that company earn with each dollar of shareholder’s equity.
To calculate:
The return on equity for 2013 and 2012 and comment on the same.
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MANAGERIAL ACCOUNTING W/CONN+ F17
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