Question

Hometown Supply Company reported the following information in its comparative financial statements for the fiscal year ended January 31, 2018: E: (Click the icon to view the data.) Read the requirements. Requirement 1. Compute net profit margin ratio (%) for the years ended January 31, 2018 and 2017. Did it improve or worsen in 2018? Identify the formula, then calculate profit margin for 2018 and 2017. (Round your answers to the nearest hundredth of a percent, X.XX%.) = Net profit margin ratio % 2018 2017 A Requirements A Data Table January 31, January 31, 2017 2018 1. Compute net profit margin ratio for the years ended January 31, 2018 and 2017. Did it improve or worsen in 2018? 2. Compute asset turnover for the years ended January 31, 2018 and 2017. Did it improve or worsen in 2018? 3. Compute return on assets for the years ended January 31, 2018 and 2017 Did it improve or worsen in 2018? Which component-net profit margin ratio or asset turnover-was mostly responsible for the change in the company's return on assets? Net earnings ........, ......... $ Average total assets ... 84,000 $ 4,200 $ 70,000 $ 82,600 4,050 69,450 Print Print Done Done 5 parts Clear All remaining Check Answer

Answer 1

Net profit margin 1 = Net profit margin (%) / Net sales / $80,000 1 Net earnings $4,200 4,050 = 2018 5% 2017 / 82,600 - 4.9% has been improved when compared 2018 Net profit margin with 2017 2). Asset turnover for 2017 & 2018 Net Assets / Average total assets = Asser tumo $70,000 & 84,000 / (84000 82x600) - 1.2 2018 = 1.19 2017 82,600 / 69,450 improved when compared 3 2018 Asset turnover has been with the year 2017. Return on 3) Return on assets. Net income / Average total assets a assets. 2018 = $4,200 / $70,000 = 67 2017 - $ 4,050 / 69,450 = 5.83% 2018, return on assets ratio has been improved when compared with 2017 Net profits margin is the most responsible for change. the company Return on assets.