Concept Introduction:
Profit Margin:
The proportion of net profit or net income of the company by its revenue refers to profit margin. It is represented as a percentage and indicates the efficiency of the company in using its income. Profit margin facilitate comparison with the competitor and helps to concentrate in the improvement of business.
Requirement 1:
To Calculate:
The Profit margin for the company Edison Co. to measure the profitability of a business activity.
Concept Introduction:
Requirement 2:
Return on total assets:
Return on assets is the ratio of profit of the business in relation to the total assets of the company. In other words, return on assets also represents the efficient usage of resources or assets by the management in generating revenues.
To Calculate:
The return on total assets of Edison Co. for the year to measure its efficiency in using its assets to generate income before paying off debts.
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Fundamental Accounting Principles
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