Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Im not sure if my answers are right and how to get the other answers. thanks 5. Profitability ratios Profitahulity ratios help in the analysis

Im not sure if my answers are right and how to get the other answers. thanks
image text in transcribed
image text in transcribed
5. Profitability ratios Profitahulity ratios help in the analysis of the combined impact of liquidity ratios, asset management ratios, and debt management ratios on the operating performance of a firm. Your boss has asked you to calculate the profitability ratios of Randall and Arts Inc. and make comments on its second-year performance as compared with its first-year performance. The following shows Randall and Arts Inc.'s income statement for the last-two years. The company had assets of $11, 750 million in the first year and $18,796 million in the second year. Common equity was equal to $6,250 mililion in the first yeat, 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. Randall and Arts Inc. Income Statement For the Year Ending on December 31 (Millions of dollars) Decision makers and analysts look deeply into profitability ratios to identify trends in a 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 company earned 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 profit margin is increasing. If a company issues new common shares but its net income does not increase, return on common equity will increase

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

Legal Handbook For Financial Planning In 2019

Authors: Allen Buckley

1st Edition

1091578826, 978-1091578821

More Books

Students also viewed these Finance questions

Question

=+b) What do you think of this option? Section 6.2

Answered: 1 week ago