The average price of a gallon of gas in 2013 dropped $0.12 (3 percent) from $3.61 in 2012 (to $3.49 in 2013). Let's see whether these changes are reflected in the income statement of Insignia Corporation for the year ended December 31, 2013 (amounts in billions).
| |
2013 |
2012 |
| Total Revenues |
$ |
265 |
|
$ |
285 |
|
| Costs of Crude Oil and Products |
|
123 |
|
|
126 |
|
| Other Operating Costs |
|
57 |
|
|
53 |
|
| |
| Income before Income Tax Expense |
|
85 |
|
|
106 |
|
| Income Tax Expense |
|
37 |
|
|
45 |
|
| |
| Net Income |
$ |
48 |
|
$ |
61 |
|
| |
1-a. Compute the gross profit percentage for each year. (Round your answers to 1 decimal place.)
2012 ___________________%
2013 ___________________%
1-b. Assuming that the change from 2012 to 2013 is the beginning of a sustained trend, is Insignia likely to earn more or less gross profit from each dollar of sales in 2014? More Or Less Gross Profit?
2-a. Compute the net profit margin for each year. (Round your answers to 1 decimal place.)
2012 _________%
2013___________%
2-b. Did Insignia do a better or worse job of controlling expenses, other than the costs of crude oil and products, in 2013 relative to 2012? Better or Worse?
3-a. Insignia reported average net fixed assets of $210 billion in 2013 and $154 billion in 2012. Compute the fixed asset turnover ratios for both years. (Round your answers to 2 decimal places.)
2012_________%
2013 _________%
3-b. Did the company better utilize its investment in fixed assets to generate revenues in 2013 or 2012?
2012 or 2013
4-a. Insignia reported average stockholders' equity of $200 billion in 2013 and $154 billion in 2012. Compute the return on equity ratios for both years. (Round your answers to 1 decimal place.)
2012___________%
2013___________%
4-b. Did the company generate greater returns for stockholders in 2013 or 2012?