Question

the Loser's.. th Dashboard (81) grandson - Blo.. A manufacturing company's financials reveal the following ratios: Ratio/Calculation Gross Profit Margin Operating Profit Margin Net Profit Margin 2016 42.0% 17.0% 5.0% 2015 41.0% 18.0% 5.0% 2014 42.0% 18.0% 6.0% 2013 43.0% 21.0% 8.0% 2012 42.0% 21.0% 8.0% Industry Ave. 40.0% 20.0% 8.0% Considering the profitability margins presented above (GPM, OPM and NPM), what advice would you give to This company on the different areas of the income statement they should focus their attention on in an effort to improve the company's overall profitability? (15 Points) F A B I - - E %

Answer 1

Answer:

From The given data we found that company's GPM is above the industry average and consistent for last 5years where company's OPM and NPM is less than industry average. OPM and NPM is also decreasing .

It means company's operating expenses has been increasing for last 5 years and its operation expense is also above industry average.So for company to become profitable it should reduce its operational expenses significantly.