Condition B: Decreasing cost of goods sold to sales percentage, coupled with a decreasing inventory turnover Condition C: Increasing cost of goods sold to sales percentage, coupled with a decreasing inventory turnover

1. Condition B: Decreasing cost of goods sold to sales percentage, coupled with a decreasing inventory turnover

Condition B: Firm raises prices to increase its gross margin but inventory sells more slowly. Firm shifts its product mix toward higher margin, slower moving products. Firm produces a higher proportion of its products instead of outsourcing, thereby capturing more of the gross margin but requiring the firm to carry raw materials and work-in-process inventories.

2. Condition C: Increasing cost of goods sold to sales percentage, coupled with a decreasing inventory turnover.

Weak economic conditions lead to reduced demand for a firm's products, necessitating price reductions to move goods. Despite price reductions, inventory builds up.

3. Condition D: Decreasing cost of goods sold to sales percentage, coupled with an increasing inventory turnover

Condition D: Strong economic conditions lead to increased demand for a firm's products, allowing price increases. An inability to replace inventory as fast as the firm sells it leads to an increased inventory turnover. Firm implements a just-in-time inventory system, reducing storage costs, product obsolescence, and the amount of inventory held.

4. ROA Disaggregated

Profit margin x Asset turnover

5. Profit margin

Same numerator as ROA/ sales

6. Asset turnover

Sales / Avg total assets

7. ROCE Disaggregated

Profit margin x asset turnover x capital structure leverage ratio

8. Profit margin

Same numerator as ROCE/ Net sales

9. Asset turnover

Net sales/ Avg total assets

10. Capital structure leverage ratio

Avg total assets/ avg common shareholders equity