Red Wall Corporation reported net sales of $250,000, cost of goods sold of

(SO 6) $100,000, operating expenses of $50,000, net income of $87,500, beginning total assets

—e of $500,000, and ending total assets of $600,000. Calculate each of the following values and explain what they mean.

(a) Profit margin ratio.

(b) Gross profit rate.

Calculate profitability ratios.