Is it reasonable to be changes in the metro marito changes in Tres tax rate? drop down options 1. more, less 2.gross profit, net income, EBIT 3. ineffective, effective 4. interest and tax expenses, cost of goods sold 5.levels of leverage, manufacturing proccess, marketing method 6. unfavorably, favorably 7. improving, worsening, constant 8. consistent, inconsistant 9. sales, total assests 10. decreasing, increasing, variable first decreasing then increasing slightly, variable first increasing then decreasing substantly 11. increase in other expenses account, decrease in the other expenses account, increases in the selling general and administrative expense account, decrease in the selling general ans administrative expense accounts 12. a constant rate of 35%, a rate that varies between 20% and 35% ofitability Ratios Gross profit margin 2010 30.49% 2009 30.54% 29.78 % 2008 Operating profit margin 2010 7.98 % 2009 6.10 % 7,00 % 2008 Net profit margin 2010 4.44% 2009 3.92 % 2008 3.52 % ROA 2010 6.68 % 5.59 % 2009 2008 5.02% ROE 2010 % 2009 % 2008 % BEP 2010 9 2009 % 2008 % Finance in Action - Ratio Analysis To answer these questions, focus primarily on income statement accounts and relate them selectively to either the firm's asset holdings (total assets) or its sources of financing (such as its common equity). For example: 1. The return on assets (ROA) ratio relates the volume of after-tax earnings generated to each dollar of company assets. The trend of Target's ROA ratio, over the period of 2008 to 2010, indicates that management is becoming productive or effective in generating dollars. In addition, the return on equity (ROE) ratio provides shareholders with a summary value that indicates the amount of net income generated by each dollar of stockholders' equity. The trend of Target's ROE ratios indicates that management is in generating a growing return to Target's shareholders. Which of the following statements are correct? Check all that apply. The trend of the Net Income account suggests that Tarpet doing a better job in managing its operating and debt-financing costs. The trend of Target's Net Income account is consistent with the observed behavior of the ROA and ROE ratios. An examination of the trend of the total amet account balances further supports the behavior of the ROA values 2. In contrast, the basic earnings power (BEP) ratio provides insights into the effectiveness of Target's management in generating profits using the firm's total assets-before consideration of its By excluding these expenses from the calculation, the ratio is useful for comparing companies that employ differing tax treatments and Which of the following statements are correct? Check all that apply During 2008 to 2010, the quality of management performance suggested by the ROA and ROE ratios is consistent with that suggested by Target's BEP ratio The behavior of the Accounts receivable and other long-term asset accounts contributed to the trend of Target's BEP ratio during 2008 to 2010 The behavior of Target's Accounts payable and retained earnings accounts contributed to the trend of the BEP ratio during 2008 to The behavior of Target's Accounts payable and retained earnings accounts contributed to the trend of the BEP ratio during 2008 to 2010 In general, it is reasonable to conclude that the trend of the BEP ratio reflects 2010 period. on management's performance during the 2008-to- The trend of the BEP ratio indicates that Target's management performance has been ROA and ROE ratios. which is with that of the 3. The profit margin ratios-gross, operating, and net--are useful to users of financial Information interested in the company's ability to manage (but not necessarily minimize) its costs. Each ratio places a different income statement subtotal (gross profit, EBIT, and net income) in the numerator and as the its denominator uses The pattern of gross profit margins from year to year suggests that Target's costs of goods sold as a percentage of total sales are This trend is verifled by which of the following data? Target's cost of goods sold, expressed as a percentage of total sales, for 2008, 2009, and 2010 are 69.51%, 69.46%, and 70.22%, respectively Target's cost of goods sold, expressed as a percentage of total sales, for 2008, 2009, and 2010 are 30.49%, 30.54%, and 29.78%, respectively, O Target's cost of goods sold, expressed as a percentage of total sales, for 2008, 2009, and 2010 are 70.22%, 69.46%, and 69,51%, respectively. 4. An examination of the income statement data suggests that the growth in the operating and net profit margins is mostly attributable to Is it reasonable to attribute changes in the net profit margin to changes in Target's tax rate? because Target pays Is it reasonable to be changes in the metro marito changes in Tres tax rate? drop down options 1. more, less 2.gross profit, net income, EBIT 3. ineffective, effective 4. interest and tax expenses, cost of goods sold 5.levels of leverage, manufacturing proccess, marketing method 6. unfavorably, favorably 7. improving, worsening, constant 8. consistent, inconsistant 9. sales, total assests 10. decreasing, increasing, variable first decreasing then increasing slightly, variable first increasing then decreasing substantly 11. increase in other expenses account, decrease in the other expenses account, increases in the selling general and administrative expense account, decrease in the selling general ans administrative expense accounts 12. a constant rate of 35%, a rate that varies between 20% and 35% ofitability Ratios Gross profit margin 2010 30.49% 2009 30.54% 29.78 % 2008 Operating profit margin 2010 7.98 % 2009 6.10 % 7,00 % 2008 Net profit margin 2010 4.44% 2009 3.92 % 2008 3.52 % ROA 2010 6.68 % 5.59 % 2009 2008 5.02% ROE 2010 % 2009 % 2008 % BEP 2010 9 2009 % 2008 % Finance in Action - Ratio Analysis To answer these questions, focus primarily on income statement accounts and relate them selectively to either the firm's asset holdings (total assets) or its sources of financing (such as its common equity). For example: 1. The return on assets (ROA) ratio relates the volume of after-tax earnings generated to each dollar of company assets. The trend of Target's ROA ratio, over the period of 2008 to 2010, indicates that management is becoming productive or effective in generating dollars. In addition, the return on equity (ROE) ratio provides shareholders with a summary value that indicates the amount of net income generated by each dollar of stockholders' equity. The trend of Target's ROE ratios indicates that management is in generating a growing return to Target's shareholders. Which of the following statements are correct? Check all that apply. The trend of the Net Income account suggests that Tarpet doing a better job in managing its operating and debt-financing costs. The trend of Target's Net Income account is consistent with the observed behavior of the ROA and ROE ratios. An examination of the trend of the total amet account balances further supports the behavior of the ROA values 2. In contrast, the basic earnings power (BEP) ratio provides insights into the effectiveness of Target's management in generating profits using the firm's total assets-before consideration of its By excluding these expenses from the calculation, the ratio is useful for comparing companies that employ differing tax treatments and Which of the following statements are correct? Check all that apply During 2008 to 2010, the quality of management performance suggested by the ROA and ROE ratios is consistent with that suggested by Target's BEP ratio The behavior of the Accounts receivable and other long-term asset accounts contributed to the trend of Target's BEP ratio during 2008 to 2010 The behavior of Target's Accounts payable and retained earnings accounts contributed to the trend of the BEP ratio during 2008 to The behavior of Target's Accounts payable and retained earnings accounts contributed to the trend of the BEP ratio during 2008 to 2010 In general, it is reasonable to conclude that the trend of the BEP ratio reflects 2010 period. on management's performance during the 2008-to- The trend of the BEP ratio indicates that Target's management performance has been ROA and ROE ratios. which is with that of the 3. The profit margin ratios-gross, operating, and net--are useful to users of financial Information interested in the company's ability to manage (but not necessarily minimize) its costs. Each ratio places a different income statement subtotal (gross profit, EBIT, and net income) in the numerator and as the its denominator uses The pattern of gross profit margins from year to year suggests that Target's costs of goods sold as a percentage of total sales are This trend is verifled by which of the following data? Target's cost of goods sold, expressed as a percentage of total sales, for 2008, 2009, and 2010 are 69.51%, 69.46%, and 70.22%, respectively Target's cost of goods sold, expressed as a percentage of total sales, for 2008, 2009, and 2010 are 30.49%, 30.54%, and 29.78%, respectively, O Target's cost of goods sold, expressed as a percentage of total sales, for 2008, 2009, and 2010 are 70.22%, 69.46%, and 69,51%, respectively. 4. An examination of the income statement data suggests that the growth in the operating and net profit margins is mostly attributable to Is it reasonable to attribute changes in the net profit margin to changes in Target's tax rate? because Target pays