Chapter 3, Problem 4BTN

To determine

Concept Introduction:-

Annual report: The annual report includes a general description of the company, audited statements of income, financial position, cash flow and notes to the statements providing details for various line items.

Return on assets: It is the ratio of annual net income to average total assets of a business during a financial year. It is a profitability ratio. Higher value of ROA shows that the business is more profitable.

Return on assets = Annual net income / Average Total assets.

Debt ratio: It is the ratio of total liabilities to total assets. It is a financial ratio, which interprets the portion of the company’s assets that are financed by debts.

Debt ratio = Total liabilities/Total Assets.

Profit Margin: It is the ratio of net income to net sales, also known as return on sales ratio or gross profit ratio. It is the profitability ratio. It shows what percentage of sales is left over all expenses that are paid by the business.

To compute:-

a) Return on assets

b) Debt ratio

c) Profit Margin