Question

_1. Total net profit margin measures:

1. Productive and efficient use of only property plant and equipment
2. Return to common shareholders
3. Net income dollars generated by each dollar of sales and is used to interpret management’s ability to control expenses.
4. Annual number of times inventory is turned into a sale
5. Ability of the firm to generate sales through the effective and efficient use of assets

______2. T or F The total asset turnover component of the DuPont method measures the ability of management to generate sales through the effective and efficient use of assets. (if false, identify and correct the error)

______3. If gross profit margin decreased from the prior year, this could be due to all the following, except:

1. Inventory cost increases and no selling price increase
2. Increasing sales prices and stable inventory costs
3. Sales mix has changed to lower margin products
4. Stable volume of sales, stable sales prices and rapidly rising inventory costs
5. Adoption of just-in-time inventory purchasing processes that have failed to capture expected efficiencies

______4. Use the financial information of Sarah Corporation for the year ended December 31, Year 2:

Cost of goods sold	499,500
Selling and admin expenses	95,000
Net sales	1,025,000
Interest expense	$18,000
Income tax	15,000

The gross profit and gross profit margin for year 2 are

a. $430,500; 42.0%

b. $525,500; 48.7%

c. $525.500; 51.3%

d. $397,500; 38.8%

Answer 1

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Grots pretl Salos-Cost of oools Sold 499500 525500 525600 Cross proht paeadage 1625000 B1.3 Answer 525500 513-