Calculate the missing amounts - profit margin ratio

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Reference no: EM13550367

Rodriguez Inc. operates a retail operation that purchases and sells home entertainment products. The company purchases all merchandise inventory on credit and uses a periodic inventory system. The Accounts Payable account is used for recording inventory purchases only; all other current liabilities are accrued in separate accounts. You are provided with the following selected information for the fiscal years 2009 through 2012, inclusive.


2009

2010

2011

2012

Income Statement Data





Sales revenue


$55,000

$ (e)

$47,000

Cost of goods sold


(a)

13,800

14,300

Gross profit


38,300

35,200

(i)

Operating expenses


34,900

(f)

28,600

Net income


$ (b)

$ 2,500

$ (j)

Balance Sheet Data





Inventory

$7,200

$ (c)

$ 8,100

$ (k)

Accounts payable

3,200

3,600

2,500

(l)

Additional Information





Purchases of merchandise





inventory on account


$14,200

$ (g)

$13,200

Cash payments to suppliers


(d)

(h)

13,600

Instructions

(a) Calculate the missing amounts.

(b) Sales declined over the 3-year fiscal period, 2010-2012. Does that mean that profitability necessarily also declined? Explain, computing the gross profit rate and the profit margin ratio for each fiscal year to help support your answer.

Reference no: EM13550367

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