13.2 question 1, 2, 3, 4

E13-2 Computing and Interpreting Profitability Ratios Use the information for Chevron Corporation in E13-1 to complete the following requirements. Required: 1. Compute the gross profit percentage for each year (rounded to one decimal place). Assuming that the change from 2014 to 2015 is the beginning of a sustained trend, is Chevron likely to earn more or less gross profit from each dollar of sales in 2016? 2. Compute the net profit margin for each year (expressed as a percentage with one decimal place). Given your calculations here and in requirement 1, explain whether Chevron did a bet- ter or worse job of controlling expenses other than the costs of crude oil and products in 2015 relative to 2014. 3. Chevron reported average net fixed assets of $185 billion in 2015 and $174 billion in 2014. Compute the fixed asset turnover ratios for both years (round to two decimal places). Did the company better utilize its investment in fixed assets to generate revenues in 2015 or 2014? Chevron reported average stockholders' equity of $155 billion in 2015 and $153 billion in 2014. The company has not issued preferred stock. Compute the return on equity ratios for both years (expressed as a percentage with one decimal place). Did the company gener- ate greater returns for stockholders in 2015 or 2014? E13-1 Preparing and Interpreting a Schedule for Horizontal and Vertical Analyses The average price of a gallon of gas in 2015 dropped $0.94 (28 percent) from $3.34 in 2014 (to $2.40 in 2015). Let's see whether these changes are reflected in the income statement of Chevron Corporation for the year ended December 31, 2015 (amounts in billions). 2015 2014 Revenues Costs of Purchased Crude Oil and Products Other Operating Costs Income before Income Tax Expense Income Tax Expense Net Income $140 70 65 5 819 $210 120 60 30 10 $ 20 $ 5