The following ratios have been calculated for the Solar Tech ...

[joe]

The following ratios have been calculated for the Solar Tech Company. Analyze the profitability of Solar Tech Company.
 
  2015 2014
  Gross profit margin 37.0 42.5
  Operating profit margin 4.7 21.7
  Net profit margin 1.3 17.2
  Cash flow margin 20.4 25.9
 
 
 What will be an ideal response?

Question 2

A one-column sales journal may be used to record
 a. sales of supplies on account.
   b. sales of goods on account.
   c. sales of goods for cash.
   d. sales of supplies for cash.
   e. collections on account.

[Kingjoffery]

Answer to Question 1

The Solar Tech Company is experiencing significant declines in profits. Gross profit margin has dropped 5.5 which could be a result of declining selling prices, increased cost of goods sold, or a decline in volume if fixed costs are present in cost of goods sold. The operating profit margin has dropped 17, far greater than the drop in gross profit margin. The firm's operating expenses have either increased or a significant drop in sales, without a corresponding drop in expenses, has caused the operating profit margin to decline. Net profit margin has followed the trend of operating profit margin. Despite the poor profitability of the firm, cash flow margin is still at 20.4, although it has dropped 5.5. The firm most likely has large amounts of depreciation and amortization, noncash expenses.

Answer to Question 2

b

[joe]

Thanks for the timely response, appreciate it

[amcvicar]

Gracias!