Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

hello, please answer the entire question and ill leave a thumbs up thank you! Profitability ratios help in the analysis of the combined impact of

hello, please answer the entire question and ill leave a thumbs up thank you!
image text in transcribed
image text in transcribed
Profitability ratios help in the analysis of the combined impact of liquidity ratios, asset management ratios, and debt management ratios on the operaking performance of a fim. Your boss has asked you to calculate the profitability ratios of Gadget Twin Inc. and make comments on its second-year performance as compared with its first-year performance. The following shows Gadget Twin incis income statement for the last two years. The company had assets of $3,525 millon in the first year and $5,639 milion in the second year. Common equity was equal to $1,875 million in the fint year, and the company distributed 100% of its earnings out as dividends during the first and the second years. In addition, the firm did not issue new stock during either year. Gadget Twin Inc. Income Statement For the Year Ending on December 31 (Miliions of doliars) Calculate the profitability ratios of Gadget Twin Inc. In the following table. Convert all calculations to a percentage rounded to two decimal places. Decision makers and anolysts look deeply into profitability ratios to identify trends in o company's profitability, Profitability ratios give insights into both the survivability of a company and the benefits that shareholders receive. identify which of the following statements are true about profitability ratios. Check all that apply. If a company has a profit margin of 10%, it means that the comparly eamed a net income of $0.10 for each dollar of sales. If a company's operating margin increases but its profit margin decreases, it could mean that the company paid more in interest or taxes. An increase in a company's earnings means that the proft margin is increasing

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

School Finance Elections

Authors: Don E. Lifto, Bradford J. Senden, Daniel A. Domenech

2nd Edition

1607091488, 978-1607091486

More Books

Students also viewed these Finance questions

Question

Prepare an ID card of the continent Antarctica?

Answered: 1 week ago

Question

What do you understand by Mendeleev's periodic table

Answered: 1 week ago