Question

Computing and Interpreting Financial Statement Ratios.

Answer 1

Answer:

a. Yes, the company was profitable as it is evidence by the positive net profit margin.

b. Yes, increase in asset turnover increases shows that the operating assets generate higher amount of sales than the last year.

Explanation:

a. Net Profit margin is the percentage (%) of the revenue remaining after all the expenses are subtracted from the sales. It states the amount of profit which a business could extract from the aggregate sales.

Yes, the company is profitable in the year 2015 as the business has positive net profit margin and it is also evidenced.

b. Assets turnover ratio is the one which measures the efficiency of the company or the business and its ability to generate the sales from the assets through comparing the net sales with the average aggregate assets.

Yes, the increase (last year it was 1.29, but now it increases from 1.29 to 1.42) states that the operating assets will generate higher amount of sales from the last year.