ABC Corp has the following financial data for the past three years:

• Year 1: Sales of $1,000,000, Cost of goods sold of $700,000, and Gross Profit of $300,000
• Year 2: Sales of $1,200,000, Cost of goods sold of $840,000, and Gross Profit of $360,000
• Year 3: Sales of $1,500,000, Cost of goods sold of $1,050,000, and Gross Profit of $450,000

Assuming that all other expenses have remained constant, calculate the following ratios for each year:

a) Gross profit margin b) Operating profit margin c) Net profit margin d) Return on assets (ROA) e) Return on equity (ROE)

Show all calculations and provide a brief interpretation of each ratio.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below a Gross profit margin Gross profit margin Gross profit Sales Year 1 300000 1000000 03 or ... View the full answer