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what can you say about the company's profitability given the following data PROFITABILITY RATIOS Gross Margin Percentage Net Profit Margin Earnings per Share Return on
what can you say about the company's profitability given the following data
PROFITABILITY RATIOS Gross Margin Percentage Net Profit Margin Earnings per Share Return on Total Assets (ROA) Return on Common Equity (ROE) FORMULA Gross Profit Gross Sales/Receipt Earnings Available for Common Stockholders Gross Sales/Receipt Earnings Available for Common Stockholders Number of Shares of Common Stock Outstanding Earnings Available for Common Stockholders Total Assets Earnings Available for Common Stockholders Common Stock Equity 2011 2010 2009 39.1% 28.7% 22.7% -3.9% 1.0% -8.1% -25.98 6.7 -49.9 -3.4% 0.8% -6.5% -3.6% 0.9% -6.6% What can you say about the company's profitability given the following data? Gross margin, the relationship between gross profit and sales, has increased during the years. This means that the company either increased the selling price or decreased the cost of goods sold or both. Though the gross margin has increased over the years, it does not indicate that the company's profitability has increased. The company had a net loss during 2009, slightly improved just to cover up the loss and to show a marginal profit during 2010 and again made a net loss during 2011. As the company made a net loss during the years 2009 and 2011, the earnings per share also would obviously be negative. Due to net profit made during 2010, the EPS is positive during the year. The return on total assets and common equity are not satisfactory, especially during the years 2009 and 2011, negative due to net loss. To conclude, the company's profitability is very poor. In fact, the company is making losses and only 2010 is slightly better due to a marginal profit. Otherwise, profitability is worseStep by Step Solution
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