Monique Smith is the principal stockholder and president of Monique Tapestries, Inc., which wholesales fine tapestries to retail stores. Because Smith was not satisfied with the company earnings in 20x6, she raised prices in 20x7, increasing gross margin from sales from 30 percent in 20x6 to 35 percent in 20x7. Smith is pleased that net income went up from 20x6 to 20x7, as shown in the comparative income statements on the next page. Total assets for Monique Tapestries, Inc., at year end for 20x5, 20x6, and 20x7 were $1,246,780,

$1,386,810, and $1,536,910, respectively.

Has Monique Tapestries’ profitability really improved? (Hint: Compute profit margin and return on assets.) What factors has Smith overlooked in evaluating 

the profitability of the company? (Hint: Compute asset turnover and comment on the role it plays in profitability.)
Decision Analysis Using Excel Financial Analysis for Loan Decision

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20x7 20x6 Revenues Net sales Costs and expenses Cost of goods sold Selling and administrative expenses Total costs and expenses Income before income taxes Income taxes Net income $1,222,600 $1,386,400 $ 794,690 $ 970,480 308,398 $1,103,088 305,008 $1,275,488 $ 119,512 $ 110,912 30,000 28,000 $ 89,512 $ 82,912