Chapter 11
Financial Statement Analysis
573
b) True or False? The quick ratio calculated in part a) shows that Jai Home Company is likely to
meet its short‐term cash obligations.
AP‐5B (
4
)
The income statement for Ellen Corporation for the years 2015 and 2016 showed the following
information.
2016
2015
Sales
$98,000 $66,000
Cost of Goods Sold
$77,000 $43,000
Gross Profit
$21,000 $23,000
Required
a) Calculate the gross profit margins for both years.
b) In which year does Ellen Corporation have a better gross profit margin?
