Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

E13-2 Computing and Interpreting Profitability Ratios (LO 13-4, LO 13-5) The average price of a gallon of gas in 2015 dropped $0.94 (28 percent) from

image text in transcribed
E13-2 Computing and Interpreting Profitability Ratios (LO 13-4, LO 13-5) 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 Insignia Corporation for the year ended December 31, 2015 (amounts in billions) 2015 2014 Nevenue $295 9309 Cont of Puraband Crude Oil and Products 123 120 Other Operating costs 52 52 Income before Income Tax Expense 115 131 Income Tax Expense 25 31 Net, Income $ 90 $100 Required: 1. Compute the gross profit percentage for each year. Assuming that the change from 2014 to 2015 is the beginning of a sustained trend, Is Insignia likely to earn more or less gross profit from each dollar of sales in 2016? 2. Compute the net profit margin for each year Given your calculations here and in requirement 1. explain whether Insignia dida better or worse job of controlling expenses other than the costs of crude oil and products in 2015 relative to 2014 3. Insignia reported average not foxed assets of $240 billion in 2015 and 5166 billion in 2014. Compute the fixed asset tumover ratios for both years. Did the company better utilize its investment in fixed assets to generate revenues in 2015 or 2014? 4. Insignia reported average stockholders' equity of $230 billion in 2015 and 5166 billion in 2014. The company has not issued preferred stock Compute the return on equity ratios for both years, Did the company generate greater returns for stockholders in 2015 or 20147 Complete this question by entering your answers in the tabs below. Required Required 2 Required Required

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting For Deferred Income Taxes

Authors: Bobby Carmichael

2nd Edition

1119724562, 9781119724568

More Books

Students also viewed these Accounting questions