1.Procter & Gamble reported the following information for its fiscal year end: O

Question

1.Procter & Gamble reported the following information for its fiscal year end: On net sales of $47.902 billion, the company earned net income after taxes of $4.725 billion. It had a cost of goods sold of $21.291 billion and EBIT of $9.910 billion. What are the companys gross profit margin, operating profit margin, and net profit margin? (Round answers to 1 decimal place, e.g.12.5%.)

2.For the year ended June 30, 2011, Northern Clothing Company has total assets of $99,583,100, ROA of 14.90 percent, ROE of 19.82 percent, and a profit margin of 10.41 percent. What are the company's net income and net sales? Calculate the firm

Explanation / Answer

1. Gross Profit Margin = (Sale - COGS)/Sales = (47.902 - 21.291)/47.902 = 55.6%

Operating Profit Margin = EBIT/Sales = 9.910/47.902 = 20.7%

Net Profit Margin = Net income after taxes/Sales = 4.725/47.902 = 9.9%

2. ROA = Net Income/Assets

=> Net Income = ROA * Assets = 0.149 * 99583100 = 14837882

Profit Margin = Net Income/Net Sales

=> Net Sales = Net Income/Profit Margin = 14837882/0.1041 = 142534890

ROE = Net Income/Equity

=> Equity = Net Income/ROE

Assets = Liabilities + Equity

=> Liabilities = Assets - Equity

Debt-to-Equity = Liabilities / Equity = (Assets - Equity)/Equity = 33.0%

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