1. Given the income statement for the MLC (Table 4-7) and balance sheet (Table 4-4), answer the following:
   1. Calculate the following ratios for 2013: operating profit margin, net profit margin, operating return on assets, net return on assets, and return on equity.

Ratio

2013

Operating profit margin =
Net profit margin =
Operating return on assets =
Net return on assets =
Return on equity =

b. In a written explanation, describe what each of these ratios means and the impact on MLC.

Operating profit margin

Net profit margin

Operating return on assets

Net return on assets

Return on equity

c.In a brief paragraph, describe the overall profitability of the MLC. Identify your concerns.

Table 4-7 Moderately Large Corporaton Consolidated Statement of E arnings Conso lidated Statement of Earnings in thousands, except earning per share) Horizontal Analy sis Fiscal year ended Dec. 31, 2013 Dec. 31, 2012 Dec. 31, 2011 2011-12 Net revenues Cash Sales Credit Sa les 2,888 S 6,046 8,935 5,258 8,009 S 2,456 4,572 028 12.00% 15.00% 13.95% Total Net Revenues Cost of Sales 18.25% Gross P rofit 3,574 3,604 3,303 9.10% Salaries 1,258 155 150 489 2,052 522 10 1,183 116 135 479 1,913 891 1,112 93 122 381 1,887 818 8.38% 25.00% 11.11% 32.69% 13.38% 4.64% 0.00% Depreciation General and administrative epenses Subtotal operating expenses Operating inco me Interest expense 1,512 529 1,680 588 E arnings before income tares 1,805 562 4.87% 4.87% Income taxes Net E arnings Per Common Share 1,043 4.87% Net Earnings Basic Net Earnings Diluted 4.87% 0.25 S 0.27 0.28 4.87% Weighted average shares outstanding Basic Diluted 3,500 4,000 3,500 4,000 3,500 4,000 0.00% 0.00%