Refer to Rhodes Bakery. Calculate the following profitability ratios for 2015 and 2014: Gross Profit Percentage, Operating Margin Percentage, Net Profit Margin Percentage, Return on Assets, and Return on Equity. Express each ratio as a percentage and round your answers to two decimal places, then comment on the company's performance in terms of profitability.
The company's income statements are available below. At December 31, 2013, total assets and total stockholders' equity were $325,000 and $287,500, respectively.
Definitions:
Beginning Inventory
The value of all inventory that a company has in stock at the start of an accounting period.
Ending Inventory
The final value of goods available for sale at the end of an accounting period, calculated before the new accounting period begins.
Periodic Inventory System
An inventory accounting system where updates to inventory levels are made periodically at the end of accounting periods, rather than after each sale or purchase.
Average Cost Method
An inventory costing method that assigns the average cost of all similar items in inventory to the cost of goods sold and to ending inventory.
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