The average price of a gallon of gas In 2018 Increased $0.30 (12.4 percent) from $242 in 2017 to $2.72 In 2018. Let's see whether these changes are reflected in the Income statement of Mango Corporation for the year ended December 31, 2018 (amounts in billions). 2018 2017 Revenues $ 274 $ 232 Costs of Purchased Crude Oil and Products 157 124 Other Operating Costs Income before Income Tax Expense Income Tax Expense 83 93 34 15 10 $ 24 $ 15 Net Income Required: 1. Compute the gross profit percentage for each year. Assuming that the change from 2017 to 2018 Is the beginning of a sustalned trend, Is Mango likely to earn more or less gross profit from each dollar of sales in 2019? 2. Compute the net profit margin for each year. Did Mango do a better or worse Job of controlling expenses other than the costs of crude oll and products In 2018 relative to 2017. 3. Mango reported average net fixed assets of $374 billion in 2018 and $372 billion In 2017. Compute the fixed asset turnover ratios for both years. Did the company better utilize its Investment In fixed assets to generate revenues In 2018 or 2017? 4. Mango reported average stockholders' equity of $184 billion In 2018 and $180 billion in 2017. The company has not Issued preferred stock. Compute the return on equity ratios for both years. Did the company generate greater returns for stockholders in 2018 or 2017?
The average price of a gallon of gas In 2018 Increased $0.30 (12.4 percent) from $242 in 2017 to $2.72 In 2018. Let's see whether these changes are reflected in the Income statement of Mango Corporation for the year ended December 31, 2018 (amounts in billions). 2018 2017 Revenues $ 274 $ 232 Costs of Purchased Crude Oil and Products 157 124 Other Operating Costs Income before Income Tax Expense Income Tax Expense 83 93 34 15 10 $ 24 $ 15 Net Income Required: 1. Compute the gross profit percentage for each year. Assuming that the change from 2017 to 2018 Is the beginning of a sustalned trend, Is Mango likely to earn more or less gross profit from each dollar of sales in 2019? 2. Compute the net profit margin for each year. Did Mango do a better or worse Job of controlling expenses other than the costs of crude oll and products In 2018 relative to 2017. 3. Mango reported average net fixed assets of $374 billion in 2018 and $372 billion In 2017. Compute the fixed asset turnover ratios for both years. Did the company better utilize its Investment In fixed assets to generate revenues In 2018 or 2017? 4. Mango reported average stockholders' equity of $184 billion In 2018 and $180 billion in 2017. The company has not Issued preferred stock. Compute the return on equity ratios for both years. Did the company generate greater returns for stockholders in 2018 or 2017?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The average price of a gallon of gas In 2018 increased $0.30 (12.4 percent) from $2.42 in 2017 to $2.72 in 2018. Let's see whether
these changes are reflected in the Income statement of Mango Corporation for the year ended December 31, 2018 (amounts in
billons).
2018
2017
$ 232
$ 274
157
Revenues
Costs of Purchased Crude oil and Products
124
Other Operating Costs
Income before Income Tax Expense
83
93
34
15
Income Tax Expense
10
Net Income
$ 24
$ 15
Requlred:
1. Compute the gross profit percentage for each year. Assuming that the change from 2017 to 2018 Is the beginning of a sustalned
trend, Is Mango likely to earn more or less gross profit from each dollar of sales in 2019?
2. Compute the net profit margin for each year. Did Mango do a better or worse job of controlling expenses other than the costs of
crude oll and products In 2018 relative to 2017.
3. Mango reported average net fixed assets of $374 billion in 2018 and $372 billion in 2017. Compute the fixed asset turnover ratios
for both years. Did the company better utilize its Investment In fixed assets to generate revenues In 2018 or 2017?
4. Mango reported average stockholders' equity of $184 billon In 2018 and $180 billion In 2017. The company has not Issued preferred
stock. Compute the return on equity ratios for both years. Did the company generate greater returns for stockholders in 2018 or
2017?
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