trend in profitability and pinpoint its causes. Decreasing 13. The following are extracted from the financial statements of Frem, Inc., for 2012, 2011, and 2010. HW Net sales Cost of sales Selling and administrative expenses Other income: Interest Other Earnings before tax and extraordinary credit Provision for income tax Earnings before extraordinary credit Extraordinary credit 2012 $233,000 2011 $204,000 (124,000) (110,000) (95,000) (81,500) (3,700) 100 $ 10,400 (4,800) (3,050) 1,175 $ 10,625 (4,740). 5,885 2010 net income Total assets Long-term debt Common equity- Preferred stock Preferred dividends Required: N.I N.S a. NI Aver 5,600 1,510 5,600 $ 7,395 $202,000 $173,000 $161,000 24,600 123,000 17,400 116,800 15,200 112,800 4,000 4,000 280 280 4,000 28 Compute the following ratios for 2012 and 2011. 1. Net profit margin net incom before extradar Credit 2. Total asset turnover 3. Return on assets ROA = N1 4. Return on investment +A 5. Return on total equity 6. Return on common equity 7. Gross profit margin b. Discuss the trend in profitability and identify specific causes for the trend.