The Following Ratios Have Been Calculated for the Solar Tech

question 27

Essay

The following ratios have been calculated for the Solar Tech Company.Analyze the profitability of Solar Tech Company. $\begin{array}{lcc}&2015&2014\\\text { Gross profit margin } & 37.0 \% & 42.5 \% \\\text { Operating profit margin } & 4.7 \% & 21.7 \% \\\text { Net profit margin } & 1.3 \% & 17.2 \% \\\text { Cash flow margin } & 20.4 \% & 25.9 \%\end{array}$

---

Definitions:

Accounts Receivable

Amounts owed to a business by its customers for goods or services that have been delivered but not yet paid for.

Receivables Turnover Ratio

A financial metric that measures how efficiently a company collects cash from credit customers.

Sales Returns

Goods returned by customers to the seller after the sale has occurred, typically due to defects or dissatisfaction.

Allowances

Reductions or adjustments to the carrying amount of assets or the amount of a liability, often related to accounts receivable or inventory to reflect possible uncollectibility or diminution in value.