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# 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...

• 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 companyâ€™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.
Answered Same Day Jul 03, 2021

## Solution

Nishtha answered on Jul 06 2021
CORPORATE FINANCE         4
CORPORATE FINANCE
1.    3
2.    4
3.    4
4.    4
Reference    5
1.
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
= 0.8029 or 80%
Operating margin ratio for the year 2018
Operating margin ratio = operating profit / total...
SOLUTION.PDF