BADM 2001: Introduction to Business-

Spring 2024
Instructor: Dr. Hend Aboughaly
Assignment 3
Leila Nasr 900231428
1) Calculatethe ROS for the six companies. Which company is the
most profitable? Why? (6 points).
1)Andrews 5752/74875=7.68%
Baldwin 824/72522=1.1%
Chester 507/67154=0.75%
Digby 309/67296= 0 % no return on sales.
Erie= 0% no return on sales.
Ferris=7.378%.
-Out of all the companies the one with the most profitability is andrew’s because
they have the highest return on sales of 7.68%

2) Calculate
the contribution margins of the 6 companies.Which
company has the best contribution margin? Is this good enough?
Why or why not? (6 points).
Andrews =27145/74875*100= 36.3%
Baldwin= 20804/72522*100=28.7%
Chester=20263/67154*100=30.2%
Digby=17774/67296*100=26.4% Erie=18759/67433*100=2708%
Ferris=31236/89546*100= 34.9%
Andrews has the highest contribution margin as it is over 30% this is because they cut
costs where they weren’t that important.
 3) Calculatethe Net Margins for the 6 companies. Which company
has the highest net margin? Is this good enough? Why or why
not? (6 points).
Although Baldwin's net margin is now the greatest at 29$, there is still room for
improvement in order to promote a more advantageous position.
4) Explainwhy company Erie got an emergency loan worth $9,854?
(6 points).
The high net loss has influenced their performance and led them to get an emergency
loan. This could be caused by their sales projection and forecast not being met .
5) Look at the income statement survey. Explain the reasons why
Andrews and Baldwin Companies have approximately achieved
similar total sales values (Andrews $74875 andBaldwin $72,522), yet
company Andrews was able to achieve a net profit of $5,752 while
company Baldwin has only achieved a net profit of $824. (6 points).
Although Baldwin's net margin appears strong, their earnings before interest and
taxes (EBIT) is much lower, with a significant difference between the two.Andrews
is better than Baldwin because it manages both variable and fixed costs better,
which leads to higher profitability ratios like ROS.