Reference no: EM131779487

The average price of a gallon of gas in 2013 dropped $0.12 (3 percent) from $3.61 in 2012 (to $3.49 in 2013). Let's see whether these changes are reflected in the income statement of Insignia Corporation for the year ended December 31, 2013 (amounts in billions).

	2013			2012
Total Revenues	$	265		$	285
Costs of Crude Oil and Products		123			126
Other Operating Costs		57			53
Income before Income Tax Expense		85			106
Income Tax Expense		37			45
Net Income	$	48		$	61

1-a. Compute the gross profit percentage for each year. (Round your answers to 1 decimal place.) 

2012    ___________________%

2013  ___________________%

1-b. Assuming that the change from 2012 to 2013 is the beginning of a sustained trend, is Insignia likely to earn more or less gross profit from each dollar of sales in 2014? More Or Less Gross Profit?

2-a. Compute the net profit margin for each year. (Round your answers to 1 decimal place.)

2012 _________%

2013___________%

2-b. Did Insignia do a better or worse job of controlling expenses, other than the costs of crude oil and products, in 2013 relative to 2012? Better or Worse?

3-a. Insignia reported average net fixed assets of $210 billion in 2013 and $154 billion in 2012. Compute the fixed asset turnover ratios for both years. (Round your answers to 2 decimal places.) 

2012_________%

2013 _________%

3-b. Did the company better utilize its investment in fixed assets to generate revenues in 2013 or 2012? 

2012 or 2013

4-a. Insignia reported average stockholders' equity of $200 billion in 2013 and $154 billion in 2012. Compute the return on equity ratios for both years. (Round your answers to 1 decimal place.)

2012___________%

2013___________%

4-b. Did the company generate greater returns for stockholders in 2013 or 2012?