An analyst is evaluating the profitability of Daimler AG (Xetra: DAI) over a recent five-year period. He gathers the following revenue data and calculates the following profitability ratios from information in Daimler’s annual reports:

a EBIT (Earnings before interest and taxes) is the operating profit metric used by Daimler.
Daimler’s revenue declined from 2007 to 2008 and from 2008 to 2009. Further, Daimler’s 2009 revenues were the lowest of the five years. Management’s discussion of the decline in revenue and EBIT in the 2009 Annual Report notes the following:

The main reason for the decline [in EBIT] was a significant drop in revenue due to markedly lower unit sales in all vehicle segments as a result of the global economic downturn. Cost savings achieved through permanent and temporary cost reductions and efficiency improvements realized through ongoing optimization programs could only partially compensate for the drop in revenue.
1. Compare gross profit margins and operating profit margins over the 2005 to 2009 period.
2.  Explain the decline in operating profit margin in 2009.
3. Explain why the pretax margin might have decreased to a greater extent than the operating profit margin in 2009.
4. Compare net profit margins and pretax margins over 2007 to 2009

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Revenues ( millions) Gross profit margin Operating profit (EBIT) margin Pretax margin Net profit margin 2009 2008 2007 78,924 98,469 101,569 16.92% 21.89% 23.62% -1.92% -2.91% -3.35% 2.77% 2.84% 1.73% 2006 2005 99,222 95,209 20.60% 19.48% 3.02% 4.94% 2.55% 3.19% 2.37% 8.58% 5.03% 9.04% 4.78%