Profitability Ratios. Refer to the condensed income statement for CarMax, Inc., in Exercise 21 and to the company’s balance sheet shown as follows.
Required: Compute the following profitability ratios for 2011, and provide a brief explanation after each ratio (round percentage computations to one decimal place and earnings per share to two decimal places):
1. Gross margin ratio
2. Profit margin ratio
3. Return on assets
4. Return on common shareholders’ equity
5. Earnings per share (assume weighted average shares outstanding totaled 223,449,000 shares)
Trend Analysis . The following condensed income statement is for CarMax, Inc., a large retailer of used vehicles.
a. Prepare a trend analysis of the income statements from 2010 to 2011. Use the format shown in as a guide. (Round computations to one decimal place .)
b. What does the trend analysis prepared in requirement atell you about the company?