Accounting > QUESTIONS & ANSWERS > Week Eight Homework.DeVry University, South Florida ACCT 212 . (All)

Week Eight Homework.DeVry University, South Florida ACCT 212 .

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Required: a. Calculate the five profitability ratios listed above for Adrian Express. (Round your answers to 1 decimal place.) b. Do you think the company is more profitable or less profitable than... the industry average? Less profitable Gross profit ratio = (Sales – Cost of goods sold) / Sales = ($19,910,000 - $12,400,000) / $19,910,000 = $7,510,000 / $19,910,000 = 37.7% Return on assets = Net income / (Past Year + Current Year) / 2 = $1,820,000 / (7,980,000 + 9,500,000) / 2 = $1,820,000 / 17,480,000 / 2 = $1,820,000 / 8,740,000 = 20.8% Profit Margin = Net Income / Net Sales = $1,820,000 / $19,910,000 = 9.1% Asset turnover = Sales / (Past Year + Current Year) / 2 = $19,910,000 / ($7,980,000 + $9,500,000) / 2 = $19,910,000 / 17,480,000 / 2 = $19,910,000 / 8,740,000 = 2.3 times Return on equity = Net income / (Past Year Stockholders’ equity + Current Year Stockholders’ equity) / 2 = $1,820,000 / ((1,945,000 + 1,703,000) + (1,975,000 + 3,085,000) / 2 = $1,820,000 / (3,648,000 + 5,060,000) / 2 = $1,820,000 / 8,708,000 / 2 = $1,820,000 / 4,354,000 = 41.8% [Show More]

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