Analyzing financial statements | Business & Finance homework help

Year 1: $10,000,000/$12,000,000 = 0.83 or 83%

Year 2: $11,500,000/$13,500,000 = 0.86 or 86%

Year 3: $12,100,00/$14,400 = 0.84 or 84%%

Operating Income Margin: This measures how efficiently a company can generate earnings from its operating activities and is calculated by dividing operating income (gross profit minus operating expenses) by total revenue.

Year 1: ($10 million – $4 million)/$12 million = 0.33 or 33%

Year 2: ($11.5 million – $4.8 million)/$13 million = 0.35 or 35%

Year 3 :($12million -$5million)/$14million=0 .36 or 36%

Net Income Margin: This measures how efficiently a company can generate profits from all sources (including non-operational activities such as investments) and is calculated by dividing net income (operating income minus taxes and other non-operational expenses) by total revenues.

Year 1 :($6million-$2million)/$12million=0 .33or 33 % Year 2 :($7milliom-$2milliom)/$13milliob=0 .54or 54 % Year 3 :($7 milliom-$2 milliom) /$143 milliob= 0 56or 56%.