Answer:
The Gross profit ratio is 36.6%
The Return on assets is 20%
The Profit margin is 8.8%
The Asset turnover would be 2.3 times
The Return on equity is 40.4%
Explanation:
The calculation of the five profitability ratios listed would be a follows:
Gross profit = Sales - Cost of goods sold
= $19,310,000 - $12,250,000
= $7,060,000
Gross profit ratio = Gross profit / Sales * 100
= $7,060,000 / $19,310,000 * 100
= 36.6%
The Gross profit ratio is 36.6%
Return on assets = Net income / Average total assets * 100
= $1,700,000 / [($9,200,000+$7,800,000)/2] * 100
= 20%
The Return on assets would be 20%
Profit margin = Net profit / Sales * 100
= $1,700,000 / $19,310,000 * 100
= 8.8%
The Profit margin would be 8.8%
Asset turnover = Sales / Average total assets
= $19,310,000 / [($9,200,000+$7,800,000)/2]
= 2.3 times
The Asset turnover would be 2.3 times
Return on equity = Net income / Average total equity
= $1,700,000 / [($1,900,000+$2,980,000+$1,900,000+$1,640,000)/2]
= 40.4%
The Return on equity would be 40.4%
