Computation of Profitability Ratios
Shown Below Are Selected Data from a Recent

question 57

Essay

Computation of profitability ratios
Shown below are selected data from a recent annual report of Tall Oaks Co. (Dollar amounts are in thousands.)
$$\begin{array} { | l | r | r | } \hline & \begin{array} { r } \text { Begirniing } \\\text { of the Year }\end{array} & \begin{array} { c } \text { Erd of the } \\\text { Year }\end{array} \\\hline \text { Total assets } & \$7 , 400 & \$ 8,100 \\\hline \text { Total shareholders' equity } & \$ 3,900 & \$ 4,600 \\\hline \text { Sales } & & \$ 14,000 \\\hline \text { Gross profit } & & \$ 5,000 \\\hline \text { Operating profit } & & \$ 1,400 \\\hline \text { Profit } & & \$ 1,000\\\hline\end{array}$$ Compute for the year the company's:
$\begin{array} { l } \text {(a) Gross profit rate.}&\_\_\_\%\\ \text {(b) Return on average total assets}&\_\_\_\%\\ \text {(c) Returi or average total shareholders' equity}&\_\_\_\%\\\end{array}$

Calculate and interpret the price of goods based on budget constraints and consumer preferences.

Analyze the effects of changes in prices and income on a consumer's budget constraint.

Understand and calculate the optimum choice of goods for a consumer given their preferences and prices.

Interpret the slope of a consumer's budget constraint and its economic significance.

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Definitions:

Entertainment Costs

Expenses incurred for activities related to enjoyment, such as movies, sports events, and concerts.

Net Worth

The difference between a person’s assets (what is owned) and that person’s liabilities (what is owed).

Liabilities

Financial obligations or debts that a company or individual owes to others.

Kilowatt-Hour

A unit of energy equivalent to one kilowatt of power expended for one hour of time, commonly used to measure electricity consumption.