Calculate the gross profit ratio, operating margin ratio, and net income margin ratio for the latest...

Question

Calculate the gross profit ratio, operating margin ratio, and net income margin ratio for the latest two years, and obtain the industry average ratios (if available) from IBISWorld.Analyze these ratios and discuss what each of these ratios tells you about the company’s profitability, and how it compares to the industry averages.Note any trends in these ratios from year-to-year, and discuss your assessment of the company based on these changes.If you were an investor, explain why you would or would not buy stock in the company.

Nishtha · Accepted Answer

Running Head: CORPORATE FINANCE							1
CORPORATE FINANCE 		4
CORPORATE FINANCE
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Gross Profit
It depicts the profit that company makes after deducting the cost related to the manufacturing and selling the product. As mentioned by Irawan and Sitohang (2018), the gross profit of the company appears in the income statement. 
Gross profit of Adobe Inc. for the year 2018
Gross profit ratio = gross profit/Net sales
Gross profit = $ 7,835,009 / $ 9,338,790
=0.8389 or 83.8%
Gross profit of Adobe Inc. for the year 2019
Gross profit ratio = gross profit/Net sales
Gross profit = $ 6,291,014 / $ 7,835,009
= 0.

Calculate the gross profit ratio, operating margin ratio, and net income margin ratio for the latest two years, and obtain the industry average ratios (if available) from IBISWorld. Analyze these...

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