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Instruction a:
Financial Ratios: Financial ratios are the metrics used to evaluate the capabilities, profitability, and overall performance of a company.
Evaluation of profitability: In general, financial ratios are used to evaluate capabilities, profitability, and overall performance of a company. The following are the ratios that evaluate the profitability of a company:
Profit margin ratio: Profit margin ratio is used to determine the percentage of net income that is being generated per dollar of revenue or sales.
Formula:
To compute: Profit margin ratio for 2019.
Instruction b:
Formula:
To compute: Asset turnover ratio for 2019
Instruction c:
Asset turnover ratio: Asset turnover ratio is used to determine the asset’s efficiency towards sales.
Formula:
To compute: Return on assets ratio for 2019.
Instruction d:
Rate of return on common stockholders’ equity: Rate of return on stockholders’ equity is used to determine the relationship between the net income and the average common equity that are invested in the company.
Formula:
To compute: Return on assets ratio for 2019.
Instruction e:
Gross profit ratio: Gross profit ratio shows the relationship between the gross profit and net sales revenue of the company. This ratio is used to cover the operating expenses in order to earn profit.
Formula:
To compute: Gross profit rate
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Chapter 13 Solutions
Financial Accounting, 10e WileyPLUS Registration Card + Loose-leaf Print Companion
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