1- The following are extracted from the financial statements of Frem, Inc., for 2010, 2009, and 2008. Net sales 2010 $233,000 2009 2008 $204,000 Cost of sales (124,000) (110,000) Selling and administrative expenses (95,000) (81,500) Other income: Interest Other 1,175 Earnings before tax and extraordinary credit Provision for income tax Earnings before extraordinary credit Extraordinary credit Total assets Long-term debt Common equity Preferred stock Preferred dividends Required: (3,700) (3,050) 100 $ 10,400 $ 10,625 (4,800) (4,740) 5,600 5,885 1,510 $5.600 $7.395 $202,000 $173,000 $161,000 24,600 17,400 15,200 123,000 116,800 112,800 4,000 280 4,000 4,000 280 280 a. Compute the following ratios for 2010 and 2009. 23 1. 2. 3. 4. 5. 6. 7. Net profit margin Total asset turnover Return on assets Return on investment Return on total equity Return on common equity Gross profit margin b. Discuss the trend in profitability and identify specific causes for the trend