Profitability Ratios Company Year Gross Profit Margin Net Profit Margin ROA ROE
ID: 2586740 • Letter: P
Question
Profitability Ratios
Company
Year
Gross Profit Margin
Net Profit Margin
ROA
ROE
Biogen Inc.
2016
87.08%
32.28%
17.44%
34.37%
Biogen Inc.
2015
88.48%
33.38%
21.25%
35.60%
Biogen Inc.
2014
87.93%
30.32%
22.47%
30.27%
Liquidity Ratios
Company
Year
Current Ratio
Days Sales Outstanding
Inventory Turnover
Quick Ratio
Biogen Inc.
2016
2.55
52.34
1.56
1.94
Biogen Inc.
2015
2.60
52.85
1.46
1.93
Biogen Inc.
2014
2.04
49.90
1.60
1.54
Solvency Ratios
Company
Year
Debt Ratio
Debt To Equity
Biogen Inc.
2016
0.28
0.89
Biogen Inc.
2015
0.33
1.08
Biogen Inc.
2014
0.04
0.32
b. Use the table to look at the company's trended profitability, liquidity, and solvency performance.
Profitability ratios – Return on Assets (ROA), Return on Equity (ROE), Gross Margin Ratio, Net Profit Margin Ratio
Liquidity Ratios - Current Ratio, Acid Test (quick) Ratio, Days Sales Outstanding, Inventory Turnover
Solvency Ratios – Debt ratio
Profitability Ratios
Company
Year
Gross Profit Margin
Net Profit Margin
ROA
ROE
Biogen Inc.
2016
87.08%
32.28%
17.44%
34.37%
Biogen Inc.
2015
88.48%
33.38%
21.25%
35.60%
Biogen Inc.
2014
87.93%
30.32%
22.47%
30.27%
Explanation / Answer
Trended Profitability performance - The profitability ratios (except ROA) of Biogen Inc. first increased in 2015 as compared to 2014 and then decreased in 2016 as compared to 2015. However, Return on Assets (ROA) has continuously decreased from 2014 to 2016.
Trended liquidity performance - The liquidity ratios (except Quick ratio) of Biogen Inc. improved in 2015 as compared to 2014 and then reversed in 2016 as compared to 2015. However, Quick ratio has continuously improved from 2014 to 2016.
Trended solvency performance - The debt ratios of Biogen Inc. first increased in 2015 as compared to 2014 and then decreased in 2016 as compared to 2015. This shows that company has started using more debt as compared to equity in 2015 but again started using less debt on relative basis.
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