Selected financial information gathered from the Matador Corporation follows: Year 3 Year 2 Year 1 Average...

Selected financial information gathered from the Matador Corporation follows:

	Year 3	Year 2	Year 1

Average assets	$1,007,000	$1,094,000	$1,184,000
Average equity	$215,000	$294,000	$364,000
Return on assets	5.9%	6.6%	7.2%
Quick ratio	0.3	0.5	0.6
Sales	$1,650,000	$1,452,000	$1,304,000
Cost of goods sold	$1,345,000	$1,176,000	$1,043,000

Using only the data presented, which of the following statements is most correct?

A. Leverage has declined.

B. Return on equity has improved.

C. Gross profit margin has improved.

Expert Solution

B. Return on Equity has improved.

Leverage = Average Debt/ Average Equity

Gross Profit Margin = Gross Profit*100/ Sales

Gross profit = Sales - Cost of goods sold

ekkarill92 answered 2 years ago

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