Discussion 1: Ratios provide the users of financial statements with a great deal of information about the entity. Do ratios tell the whole story? How could liquidity ratios be used by investors to determine whether or not to invest in a company?
Discussion 2:
| |
Year Ending December 2012
|
Year Ending December 2011
|
Year Ending December 2010
|
|
Revenues
|
40,000
|
35,000
|
33,000
|
|
Operating Expenses
|
|
|
|
|
Salaries
|
15,000
|
10,000
|
9,000
|
|
Maintenance and Repairs
|
6,000
|
9,000
|
10,000
|
|
Rental Expense
|
2,500
|
2,500
|
2,500
|
|
Depreciation
|
2,000
|
2,000
|
2,000
|
|
Fuel
|
4,000
|
3,500
|
2,500
|
|
Total Operating Expenses
|
29,500
|
27,000
|
26,000
|
|
Operating Income
|
10,500
|
8,000
|
7,000
|
|
Sales and Administrative Expenses
|
6,000
|
4,000
|
3,000
|
|
Interest Expense
|
2,500
|
2,000
|
1,000
|
|
Net Income
|
2,000
|
2,000
|
3,000
|
Above is a comparative income statement for Cecil, Inc. for the years 2010, 2011, and 2012. Calculate the net-profit margin for each of these years. Comment on the profit margin trend.