ACC205
|
Ratios
|
Ratios provide the users of financial statements with a great deal of information about the entity. Do ratios tell the whole story? How could liquidity ratios be used by investors to determine whether or not to invest in a company?
and
|
Profit Margin
|
|
|
Year Ending December 2012 |
Year Ending December 2011 |
Year Ending December 2010 |
|
Revenues |
40,000 |
35,000 |
33,000 |
|
Operating Expenses |
|
|
|
|
Salaries |
15,000 |
10,000 |
9,000 |
|
Maintenance and Repairs |
6,000 |
9,000 |
10,000 |
|
Rental Expense |
2,500 |
2,500 |
2,500 |
|
Depreciation |
2,000 |
2,000 |
2,000 |
|
Fuel |
4,000 |
3,500 |
2,500 |
|
Total Operating Expenses |
29,500 |
27,000 |
26,000 |
|
Operating Income |
10,500 |
8,000 |
7,000 |
|
Sales and Administrative Expenses |
6,000 |
4,000 |
3,000 |
|
Interest Expense |
2,500 |
2,000 |
1,000 |
|
Net Income |
2,000 |
2,000 |
3,000 |
Above is a comparative income statement for Cecil, Inc. for the years 2010, 2011, and 2012. Calculate the net-profit margin for each of these years. Comment on the profit margin trend.
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