Question

The average price of a gallon of gas in 2013 dropped $0.12 (3 percent) from $3.61 in 2012 (to $3.49 in 2013). Let's see whether these changes are reflected in the income statement of Chevron Corporation for the year ended December 31, 2013 (amounts in billions) 2013 2012 $230 $246 128 56 Total Revenues Costs of Crude Oil and Products Other Operating Costs Income before Income Tax Expense Income Tax Expense Net Income 120 61 49 23 27 $ 26 35 Required: 1-a. Compute the gross profit percentage for each year. (Round your answers to 1 decimal place.) Gross Profit Percentage 2013 2012 1-b. Assuming that the change from 2012 to 2013 is the beginning of a sustained trend, is Chevron likely to earn more or less gross profit from each dollar of sales in 2014? More Gross Profit Less Gross Profit 2-a. Compute the net profit margin for each year. (Round your percentage answers to 1 decimal place.) Net Profit Margin 2013 2012

Answer 1

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1a. Gross Profit Percentage
		year 2013	year 2012
Trade Revenue	A	$         230	$         246
Less: Cost of crude oil and products	B	$         120	$         128
Gross Profit	C=A-B	$         110	$         118
Gross Profit Percentage	C/A	47.83%	47.97%
1b. Less Gross profit
Since revenue will be declining only
2a. Net Profit Margin
		year 2013	year 2012
Trade Revenue		$         230	$         246
Net Income		$           26	$           35
Net Profit Margin		11.30%	14.23%
(Net Income/Trade Revenue)
2b. Worse since per unit has increased to 0.93 from 0.82
		year 2013	year 2012
Trade Revenue	A	$         230	$         246
Selling Price	B	$        3.49	$        3.61
No of Units Sold	C=A/B	65.90	68.14
Other Operating Cost	D	$           61	$           56
Other Operating Cost per Unit	D/C	$        0.93	$        0.82
3a. Fixed Asset Turnover
		year 2013	year 2012
Net Sale	A	$         230	$         246
Fixed Assets	B	$         175	$         140
Fixed Asset Turnover	A/B	131.43%	175.71%
3b. In 2912 has Ratio is higher
4a. Return on Equity
		year 2013	year 2012
Net Income	A	$           26	$           35
Shareholder Equity	B	$         165	$         140
Return on Equity	A/B	15.76%	25.00%