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). Lets see whether these changes are reflected in the income statement of Chevron Corporation for the year ended December 31, 2015 (amounts in billions).

	2015				2014
Revenues		$	140			$	210
Cost of Purchased Crude Oil and Products			70				120
Other Operating Costs			65				60
Income before Income Tax Expense			5				30
Income Tax Expense			-				10
Net Income		$	5			$	20

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 Chevron 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 Chevron did a better or worse job of controlling expenses other than the costs of crude oil and products in 2015 relative to 2014.
3. Chevron reported average net fixed assets of $185 billion in 2015 and $174 billion in 2014. Compute the fixed asset turnover ratios for both years. Did the company better utilize its investment in fixed assets to generate revenues in 2015 or 2014?
4. Chevron reported average stockholders equity of $155 billion in 2015 and $153 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 2014?

Required 1 Required 2 Required 3 Required 4 1-a. Compute the gross profit percentage for each year. (Round your answers to 1 decimal place.) 1-b. Assuming that the change from 2014 to 2015 is the beginning of a sustained trend, is Chevron likely to earn more or less gross profit from each dollar of sales in 2016? Gross Profit Percentage 50.0 % 42.9 % 2014 2015 Likely to earn in 2016? More Gross Profit OLess Gross Profit Required 1 Required 2 Required 3 Required 4 2-a. Compute the net profit margin for each year. (Round your answers to 1 decimal place.) 2-b. Did Chevron do a better or worse job of controlling expenses other than the costs of crude oil and products in 2015 relative to 2014. 2014 2015 Net Profit Margin 3.6 % 9.5 % Controlling expenses in 2015 vs 2014? Better Job IO Worse Job Required 1 Required 2 Required 3 Required 4 3-a. Chevron reported average net fixed assets of $185 billion in 2015 and $174 billion in 2014. Compute the fixed asset turnover ratios for both years. (Round your answers to 2 decimal places.) 3-b. Did the company better utilize its investment in fixed assets to generate revenues in 2015 or 2014? 2014 2015 Fixed Asset Turnover 0.76% 1.20 X Investment better utilized in 2015 or 2014? 2015 O 2014 Required 1 Required 2 Required 3 Required 4 4-a. Chevron reported average stockholders' equity of $155 billion in 2015 and $153 billion in 2014. The company has not issued preferred stock. Compute the return on equity ratios for both years. (Round your answers to 1 decimal place.) 4-b. Did the company generate greater returns for stockholders in 2015 or 2014? Return on Equity (ROE) 2014 2015 3.2% 13.1 X % % Greater returns generated in 2014 or 2015? 2015 O 2014 Required 3 Required 4 ) Required 1 Required 2 Required 3 Required 4 1-a. Compute the gross profit percentage for each year. (Round your answers to 1 decimal place.) 1-b. Assuming that the change from 2014 to 2015 is the beginning of a sustained trend, is Chevron likely to earn more or less gross profit from each dollar of sales in 2016? Gross Profit Percentage 50.0 % 42.9 % 2014 2015 Likely to earn in 2016? More Gross Profit OLess Gross Profit Required 1 Required 2 Required 3 Required 4 2-a. Compute the net profit margin for each year. (Round your answers to 1 decimal place.) 2-b. Did Chevron do a better or worse job of controlling expenses other than the costs of crude oil and products in 2015 relative to 2014. 2014 2015 Net Profit Margin 3.6 % 9.5 % Controlling expenses in 2015 vs 2014? Better Job IO Worse Job Required 1 Required 2 Required 3 Required 4 3-a. Chevron reported average net fixed assets of $185 billion in 2015 and $174 billion in 2014. Compute the fixed asset turnover ratios for both years. (Round your answers to 2 decimal places.) 3-b. Did the company better utilize its investment in fixed assets to generate revenues in 2015 or 2014? 2014 2015 Fixed Asset Turnover 0.76% 1.20 X Investment better utilized in 2015 or 2014? 2015 O 2014 Required 1 Required 2 Required 3 Required 4 4-a. Chevron reported average stockholders' equity of $155 billion in 2015 and $153 billion in 2014. The company has not issued preferred stock. Compute the return on equity ratios for both years. (Round your answers to 1 decimal place.) 4-b. Did the company generate greater returns for stockholders in 2015 or 2014? Return on Equity (ROE) 2014 2015 3.2% 13.1 X % % Greater returns generated in 2014 or 2015? 2015 O 2014 Required 3 Required 4 )