Ricardo Martinez, the founder of Martinez Products Corporation, projects sales to double to $400,000 in the second year of operation A If the financial ratios calculated for Year 1 in Problem 8 remain the same in Year 2, what would be Martinezs dollar amount projections in his business plan for (a)...

a Gross Profit Gross Profit Margin x Revenue 50 x 400000 200000 Net Pr ...

Ricardo Martinez, the founder of Martinez Products Corporation, projects sales to double to $400,000 in the second

Question:

Ricardo Martinez, the founder of Martinez Products Corporation, projects sales to double to $400,000 in the second year of operation.
A. If the calculated for Year 1 in Problem 8 remain the same in Year 2, what would be Martinez’s dollar amount projections in his business plan for
(a) Gross profit,
(b) Net profit or income, and
(c) Total assets?
B. How would your answers change in Part A if the gross profit margin in the second year is projected to be 60 percent, the net profit margin 25 percent, and the asset intensity at five times turnover?
C. Use the projected ratio information in Part B in the ROA model to determine the projected percentage rate of ROA.

Financial Ratios
The term is enough to curl one's hair, conjuring up those complex problems we encountered in high school math that left many of us babbling and frustrated. But when it comes to investing, that need not be the case. In fact, there are ratios that,...