1.) Explain how a company could have a decreasing gross profit margin but an increasing operating profit margin.
2.) What is an example of an industry that would need to spend a minimum amount on advertising to be competitive? On research and development?
3.) Alpha Company purchased 30% of the voting common stock of Beta Company on January 1 and paid $500,000 for the investment. Beta Company reported $100,000 of earnings for the year and paid $40,000 in cash dividends. Calculate investment income and the balance sheet investment account for Alpha Company under the cost method and under the equity method.
4.) Discuss the four items that are included in a company’s comprehensive income.
5.) Explain what can be found on a statement of stockholders’ equity.
6.) Why is the bottom line figure, net income, not necessarily a good indicator of a firm’s financial success?
7.) Using the excerpt from the Moon Company’s annual report, calculate any profit measures deemed necessary and discuss the implications of the profitability of the company.
8.) LA Theatres Inc. has two distinct revenue sources, ticket and concession revenues. The following information from LA Theatres Inc. income statements for the past three years is
available:
(in millions) 2016 2015 2014
Ticket revenue $1,731 $1,642 $1,120
Concession revenue 792 687 411
Total revenue $2,523 $2,329 $1,531
Cost of goods sold—tickets $ 951 $ 854 $ 549
Cost of goods sold—concessions 70 69 48
Total cost of goods sold $1,021 $ 923 597
Gross profit $1,502 $1,406 $ 934
a.) Calculate gross profit margins for tickets and concessions for all three years. Calculate an overall gross profit margin for LA Theatres Inc. for all three years.
b.) Analyze the changes in gross profit margin for all three years.
9.) Writing Skills Problem:
Income statements are presented for the Elf Corporation for the years ending December 31, 2016, 2015, and 2014.
Elf Corporation Income Statements for the Years
Ending December 31, 2016, 2015, and 2014
(in millions) 2016 2015 2014
Sales $700 $650 $550
Cost of goods sold 300 325 275
Gross profit $350 $325 $275
Operating expenses:
Administrative 100 100 100
Advertising and marketing 50 75 75
Operating profit $200 $150 $100
Interest expense 70 50 30
Earnings before tax $130 $100 $ 70
Tax expense (50%) 65 50 35
Net income $ 65 $ 50 $ 35
Required: What a one-paragraph analysis of Elf Corporation’s profit performance for the period.
Multiple questions postes so i am solving first two
1)Gross profit=Sales-cost of goods sold
Gross profit margin= (Sales-cost of goods sold)/Sales
Operating profit margin=(Gross profit-Operating
expense)/sales
Decreasing profit margin may be result of reduction of sales due to
price pressure and intense competetion reducing the products at
discount price
Increasing operating profit margin may be due to reduction in
operating expenses like salaries,rent and other miscellaneous
expenses to overcome the reduction on gross profit
2)Here the minimum amount means spend good amount on advertising
are jewellery shops, Food and restaurant industry where the
competetion is intense and to stay in people mind advertising is
required
Companies in industry like pharma and electronics sector needs to
spend a lot of money on research and development to stay ahead of
others in market
1.) Explain how a company could have a decreasing gross profit margin but an increasing operating...
(b) Analyze the changes in gross profit margin for all three years. gluss prunt margin for LA Theatres Inc. for all three years. 3.15. Writing Skills Problem Income statements are presented for the Elf Corporation for the years ending December 31, 2016, 2015, and 2014. Elf Corporation Income Statements for the Years Ending December 31, 2016, 2015, and 2014 (in millions) Sales Cost of goods sold Gross profit Operating expenses 2016 2015 2014 $700 350 $350 $650 325 $325 $550...
1.) What is the difference between a multiple-step and a single-step format of the earnings statement? Which format is the most useful for analysis? 2.) How is a common-size income statement created? 3.) What are the two causes of an increasing or decreasing sales number? 4.) Discuss all reasons that could explain an increase or decrease in gross profit margin. 5.) Explain how a company could have a decreasing gross profit margin but an increasing operating profit margin. 6.) What...
(c) Based on your analysis in (b), what recommendation would you give to LA Theatres to increase its gross profit margin? 3.14. LA Theatres Inc. has two distinct revenue sources, ticket and concession revenues. The follow- ing information from LA Theatres Inc. income statements for the past three years is available: (in millions) 2015 2014 Ticket revenue Concessions revenue Total revenue Cost of goods sold-tickets Cost of goods sold-concessions Total cost of goods sold Gross profit 2016 $1,731 792 $2,523...
Analyze the changes in gross profit margin for all three years. il unee i turee year years. 3.15. Writing Skills Problem Income statements are presented for the Elf Corporation for the years ending December 31, 2016, 2015, and 2014. Elf Corporation Income Statements for the Years Ending December 31, 2016, 2015, and 2014 (in millions) Sales Cost of goods sold Gross profit Operating expenses: 2016 2014 $700 350 $650 325 5350 $325 275 $550 275 Administrative 100 50 $200 70...
Question 3.11 - Using the information provided in the problem on page 145, calculate/answer the following: a. Sales growth percentage from 2014 to 2015. b. Sales growth percentage from 2015 to 2016. c. Cost of goods sold percentage for 2014. d. Cost of goods sold percentage for 2015. e. Cost of goods sold percentage for 2016. f. Gross profit margin percentage for 2014. g. Gross profit margin percentage for 2015. h. Gross profit marginpercentage for 2016. i. Operating profit margin...
Calculate gross profit margin (gross profit/revenues) and operating profit margin (operating profit/revenues) for Callaway Golf Company (refer to Exhibit 2.9). Multiple Choice 44.2% and 5.1% 50.2% and 5.1% Cannot be calculated with the information provided 44.2% and 8.3% EXHIBIT 2.9 CALLAWAY GOLF COMPANY Consolidated Statements of Operations (In thousands, except per share data) Year Ended December 31, 2016 2015 2014 $ 871,192 486,181 385,011 235,556 71,969 33,318 340,843 44,168 621 (2,368) 17,662 (1,690) 58,393 (132,561) 190,954 1,054 $ 189,900 $843,794...
Calculate gross profit margin (gross profitirevenues) and operating profit margin (operating profit/revenues) for Callaway Golf Company tceferto Exhibit 2.9) Muitiple Cholce 44.2% end 57% 50.2% and 5 Cannot be calculeted with the information provided 44.2% end 8% EXHIBIT 2.9 CALLAWAY GOLF COMPANY Consolidated Statements of Operations (In thousands, except per share data) Year Ended December 31, 2014 2015 2016 $886,945 $ 871,192 $843,794 Net sales... 529,019 486,161 486,181 Cost of sales 357,926 357,633 385,011 Gross profit. Selling expenses.. General and...
Calculate Gross profit margin, Operating profit margin, Net profit margin and total return on total assets. EXHIBIT 5: GRIG PROFIT-AND-LOSS AND BALANCE SHEET, DECEMBER 2015 (IN €) Profit and Loss December 2015 Balance Sheet December 2015 Liabilities 32,590 Assets Fixed Assets Cash 1,009 Revenue Variable Costs Freelance Knitters Gross Profit 16,062 1,452 15,076 Debtors Furniture and Fixtures Stock Current Assets Total Assets 270 740 Rent 2,019 Staffing 4,225 7,462 156 2,019 Liabilities Insurance Loan Repayments Website 858 1,740 Loan Total...
Question 10 Best Buy reported the following selected information for its three most recent fiscal years in U.S. $ millions): Net sales Cost of goods sold Income from operations Net income 2016 $39,528 30,334 1,375 807 2015 $40,339 31,292 1,450 1,246 2014 $40,611 31,212 1,144 695 Calculate the gross profit margin and profit margin for Best Buy for each of the three years. (Round all amounts to 1 decimal place, e.g. 5.2.) 2016 2015 2014 Gross profit margin Profit margin...
For a hospital, how to calculate Gross Profit Margin , Operating Profit Margin , Net Profit Margin , Profit after Taxes ? Note: There is no "Cost of good sold"and “Sales”。 There are only “Operating Revenues”, “Operating Expenses”, “Operating Income (Loss)”, “Nonoperating Revenues (Expenses)” , and “Net Position” given.