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Profitability Ratios

Profitability Ratios

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Profitability Ratios

  1. Provide brief definition of what Profitability ratios mean to the company.
  2. What are the differences between Apple and Samsung in relationship to each of the ratios?

See attached for ratios

    • Net Profit Margin Samsung vs Apple
    • Gross Profit Margin Samsung vs Apple
    • Return on Equity (ROE) Samsung vs Apple
    • Net Return on Assets Samsung vs Apple

     3. What does it mean to the company’s profitability? Is it good or bad?

APPLE INC 2019 = Net Profit 55,256 55,256.00 Net Profit Margin 21.24% Net Sales 260,174 260,174.00 = Gross Profit Gross Profit Margin 98,392 260,174 98,392.00 260,174.00 37.82% Net Sales = Net Income 55,256 90,488 55,256.00 98,817.50 / 2 Return on Equity (ROE) 56% Average Shareholder's Equity + 107,147 = = Net Income 55,256 55,256.00 %3D Net Return on Assets 16% Average Total Assets 338,516 + 365,725 = 352,120.50 /2 SAMSUNG 2019 = Net Profit 18,652 18,652.00 %3D Net Profit Margin 9.43% Net Sales 197,690 197,690.00 = Gross Profit Net Sales 71,354 71,354.00 Gross Profit Margin 36.09% 197,690 197,690.00 = Net Income 18,652 18,652.00 Return on Equity (ROE) 9% Average Shareholder's Equity 225,559 + 212,579 = 219,069.00 /2 = Net Income 18,652 18,652.00 Net Return on Assets 6% Average Total Assets 302,511 + 291,178 = 296,844.50 /2
Transcribed Image Text:APPLE INC 2019 = Net Profit 55,256 55,256.00 Net Profit Margin 21.24% Net Sales 260,174 260,174.00 = Gross Profit Gross Profit Margin 98,392 260,174 98,392.00 260,174.00 37.82% Net Sales = Net Income 55,256 90,488 55,256.00 98,817.50 / 2 Return on Equity (ROE) 56% Average Shareholder's Equity + 107,147 = = Net Income 55,256 55,256.00 %3D Net Return on Assets 16% Average Total Assets 338,516 + 365,725 = 352,120.50 /2 SAMSUNG 2019 = Net Profit 18,652 18,652.00 %3D Net Profit Margin 9.43% Net Sales 197,690 197,690.00 = Gross Profit Net Sales 71,354 71,354.00 Gross Profit Margin 36.09% 197,690 197,690.00 = Net Income 18,652 18,652.00 Return on Equity (ROE) 9% Average Shareholder's Equity 225,559 + 212,579 = 219,069.00 /2 = Net Income 18,652 18,652.00 Net Return on Assets 6% Average Total Assets 302,511 + 291,178 = 296,844.50 /2
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