Homework Answers
1.a Gross profit percentage = gross profit/net revenue
2012 % = 59,500/135,000 = 44.1%
2013 % = 45,000/110,000 = 40.9%
1.b Less gross profit because trends is downfall for gross profit percentage.
2.a Net profit margin = Net income/net revenue
2012 margin = 13,975/135,000 = 10.4%
2013 margin = 5,900/110,000. = 5.4%
2.b Computer tycoon did a worse job in controlling expenses as its profit margin decreases by 5%.
3.a Fixed asset turnover ratio = Net revenue/average net fixed asset
2012 ratio = 135,000/46,100 = 2.93
2013 ratio = 110,000/55,200 = 1.99
3.b In 2012 company best utilised its investment in fixed assets.
4.a Return on equity = (Net income - preferred dividend)/average stockholder equity
2012 ROE = 13,975/41,800 = 33.4%
2013 ROE = 5,900/55,000 = 10.7%
4.b No
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