Read the overview below and complete the activities that follow.

Information used to examine the profit margin management path comes from the retailer's income statement, which summarizes a firm's financial performance over a period of time. The information used to analyze a retailer's asset management path primarily comes from the retailers balance sheet. Whereas the income statement summarizes the financial performance over a period of time, the balance sheet summarizes a retailer's financial position at a given point in time, typically at the end of the fiscal year. For this exercise, information is taken from a previous annual report from Costco. CONCEPT REVIEW: The strategic profit model is a method for summarizing the factors that affect a firm's financial performance, as measured by return on assets. Return on assets is an important performance measure for a firm and its stockholders because it measures the profits that a firm makes relative to the assets it possesses. The strategic profit model decomposes ROA into two components: (1) operating profit margin percentage and (2) asset turnover. These two components illustrate that ROA is determined by two sets of activities-profit margin management and asset turnover management-and that a high ROA can be achieved by various combinations of operating profit margins and asset turnover levels.

QUESTION PROGRESS Click And Drag Click And Drag Match the outcome to the correct equation. Each equation is a different component of the strategic profit model. Equation Outcome Net Operating Profit before TaxesTotal Current Total Fixed Assets Assets Gross Margin Net Sales Total Assets Net Profit Margin Percent Cost of Goods Sold Net Sales Net Profit after Taxes Operating Gross Margin Asset Turnover Net Profit before Taxes Taxes Return on Assets Net Profit after Taxes Net Saless Total Assets Net Profit Margin Percent Asset Turnover- 4 prev glossary