Selected information from Bigg Company s financial statements follows Required 1 Calculate the
Selected information from Bigg Company’s financial statements follows.
Required:
1. Calculate the following ratios for 2010 and 2011:
(a) Gross profit margin,
(b) Operating margin,
(c) Net profit margin,
(d) Accounts receivable turnover.
2. Conceptual Connection: For each of the first three ratios listed above, provide a plausible explanation for any differences that exist. (For example, why is the net profit margin higher or lower than it was the previous year?)
3. Explain what each ratio attempts to measure. Make an assessment about Bigg Company based upon the ratios you have calculated. Are operations improving or worsening?
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