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Solution Manual for Financial Reporting and Analysis 13th Edition – Chapter 8 Profitability
Problem 8-1
Ahl Enterprise lists the following data for 2011 and 2010:
2011 2010
Net income $ 52,500 $ 40,000
Net sales 1,050,000 1,000,000
Average total assets 230,000 200,000
Average common equity 170,000 160,000
Required: Calculate the net profit margin, return on assets, total asset turnover, and return on common equity for both years. Comment on the results. (For return on assets and total asset turnover, use end-of-year total assets; for return on common equity, use end-of-year common equity.)
Solution:
Ahl Enterprise has had a substantial rise in profit to sales. This is somewhat tempered by a reduction in asset turnover. Given a slight rise in common equity, there is a substantial rise in return on common equity.
For more Solutions click below questions:
Problem 8-2 Problem 8-3 Problem 8-4 Problem 8-5 Problem 8-6 Problem 8-7
Problem 8-8 Problem 8-9 Problem 8-10 Problem 8-11 Problem 8-12 Problem 8-13
