Computing and Interpreting Financial Statement RatiosFollowing are selected ratios of Colgate-Palmolive for 2015 and 2014.Return on Assets(ROA) Component 20152014Profitability (Net income/Sales)7.80% 11.30%Productivity (Sales/Average assets)1.371.28a. Was the company profitable in 2015? What evidence do you have of this?ONo, Colgate-Palmolive was not profitable as evidenced by its decrease in its net profit margin.OYes, Colgate-Palmolive was profitable as evidenced by its positive net profit margin.b. Is the change in productivity (asset turnover) a positive development?ONo, the increase indicates more operating assets were needed to generate the same level of sales as the prior year.OYes, the increase indicates that operating assets generated a higher level of sales than the prior year.c. Compute the company's ROA for 2015.Round answer to one decimal place (ex: 0.2345 = 23.5%).

a. Yes, Colgate Palmolive was profitable in year 2015 as evidenced by its positive net profit margin…

Answered: Computing and Interpreting Financial…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter7: Introduction To Financial Statement Analysis

Section: Chapter Questions

Problem 28P

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Computing and Interpreting Financial Statement Ratios Following are selected ratios of Norfolk Southern for 2018 and 2017. Return on Assets (ROA) Component 2018 2017 Profitability (Net income/Sales) 25.3% 53.2% Productivity (Sales/Average assets) 0.338 0.319 a. Was the company profitable in 2018?Answer b. Was the company more profitable in 2018 or 2017?Answer c. Is the change in productivity a positive or negative development?Answer d. Compute the company’s ROA for 2018 and for 2017. Note: Round answers to one decimal places (example: 10.4%). ROA 2018 Answer 2017 Answer e. From the information provided, which of the following best explains the change in ROA during 2018? Answer
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