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:
$\begin{array} { l } \text {(a) Gross profit rate.}&\_\_\_\%\\ \text {(b) Return on average total assets}&\_\_\_\%\\ \text {(c) Returi or average total shareholders' equity}&\_\_\_\%\\\end{array}$

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Definitions:

Decimals

Numbers expressed using a decimal system, involving a point to separate the whole number from the fractional part.

Mixed/Whole Numbers

Numbers that consist of both an integer and a fraction part.

Percents

A mathematical term denoting fractions of a hundred, used to describe proportions, interest rates, and changes in values.

Decimals

Numbers expressed using a decimal point to separate the whole part from the fractional part.