a)
To determine: Gross profit margin from the given financial information.
a)
Explanation of Solution
Calculation of gross profit:
Gross profit margin in 2017 is 34.89%
Gross profit margin in 2016 is 35.10 %
b)
To determine: Operating profit margin.
b)
Explanation of Solution
Calculation of operating profit margin:
Operating profit margin in 2017 is 9.55 %
Gross profit margin in 2016 is 10.26 %
c)
To determine: Net profit margin.
c)
Explanation of Solution
Calculation of net profit margin:
Net profit margin in 2017 is 6.15 %
Gross profit margin in 2016 is 6.52 %
d)
To determine: Times interest earned ratio.
d)
Explanation of Solution
Calculation of times interest earned ratio:
Company has no times interest earned ration because it doesn’t have interest expense.
e)
To determine: Return on shareholders’ equity.
e)
Explanation of Solution
Calculation of return on shareholders’ equity:
Return on shareholders’ equity in 2017 is 16.61 %
Return on shareholders’ equity in 2016 is 19.74 %
f)
To determine: Return on assets.
f)
Explanation of Solution
Calculation of return on assets:
Return on assets in 2017 is 11.46 %
Return on assets in 2016 is 12.25 %
g)
To determine: Debt-to equity ratio.
g)
Explanation of Solution
Calculation of debt-to-equity ratio:
Debt-to-equity ratio in 2017 is 0.45
Debt-to-equity ratio in 2016 is 0.61
h)
To determine: Days of inventory.
h)
Explanation of Solution
Calculation of days if inventory:
Days of inventory in 2017 is 53.71 days
Days of inventory in 2016 is 53.73 days
i)
To determine: Inventory turnover ratio.
i)
Explanation of Solution
Calculation of inventory turnover ratio:
Inventory turnover ratio in 2017 is 6.8 times per year.
Inventory turnover ratio in 2016 is 6.79 times per year.
j)
To determine: Average collection period.
j)
Explanation of Solution
Calculation of average collection period:
Average collection period in 2017 is 5.61 days
Average collection period in 2016 is 8.02 days
Based on these financial ratios it is observed that, the financial performance of company is good but flat in the year 2016.
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Chapter 4 Solutions
*CRAFTING AND EXEC. STRATEGIES >INTL. ED
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