Question

According to Case 06 Exhibit 6.1, what is Company P Operating Margin? Enter percentage, round to 2 decimal places.

Retail Airlines A B Beer C D Computers E F Hospitality G H Newspaper I J Pharmaceuticals K L Power M N Assets % O P 72 25 35 5 25 8 30 103 2 16 25 Cash & ST Investments Receivables Inventory Current Assets-Other Current Assets-Total Net Property. Plant, & Equipment Long-Term Marketable Securities Goodwill & Intangibles Assets-Other Assets-Total 6 10 5 15 14 41 7 423 910 18 129 116 0 33 59 16 14 35 31 84 75 14 64 0 0056 0 1 70 1 3 2 2 100 100 100 100 100 100 100 1 13 511 3 10 22 11 35 323 Bonn gowoctavo 1985 100 100 26 100 Liabilities & Equity% 2 97 124 10 5 5 31 00 AN 5 8 21 11 17 20 24 Accounts Payable Debt In Current Liabilities Current Liabilities-Other Current Liabilities-Total Long-Term Debt Deferred Taxes Liabilitles-Other Llabilities-Total Stockholders' Equity Total Liabilities & Equity . 12 28 18 8 4 59 41 100 0 5 29 71 100 1843 47 159 53 (59) 100 100 120 3 13 88 59 1241 100 100 100 100 17 100 76 100 100 Income/Expenses % 8600 Revenue Cost of Goods Sold Finance Div. Operating Exp. Interent Expense-Finance Division Gross Profit SG&A Expense R & D Exp. Depreciation & Amort. Other Operating Expense Eamings before Interest and Taxes Net Interest Expense Other Pretax income Income Tax Expense Earnings of Discontinued Ops. Extraord. Item & Account Change Minority Int. In Earnings Net Income Beta Price/Earnings Price to Book Dividend Payout (%) OOOOTT. 800gsonga Doro ༠°རྒྱསྐྱོ༠༠ ཀྐ ཕྱི༩ ཕྱི༠༠ Oogzoñooooo 890000600-hoooon ODOBRE WORD. og HSEE OO NOOOWW3300030008 vooooooo33 @N06-2000- 0 0 0 (7) 11 1.20 10.0 3.9 7.9 11 1.10 10.9 2.4 0.0 19 0.95 24.2 4.2 88.2 10 0.95 34.0 3.9 0.0 0.95 12.8 5.0 21.8 1.20 22.0 2.8 0.0 1.15 59.8 0.3 0.0 1.15 24.0 mmf 29.5 1.15 34.9 2.7 41.8 0.95 mmf 0.8 (39.4) (3) 1.15 18.3 5.5 0.0 12 0.75 229 6.1 88.7 1.15 27.2 1.8 91.5 1.50 9.7 1.2 0.0 1.05 nmf 25.5 0.0 1.00 19.2 6.4 197.5 Liquidity Current Ratio Quick Ratio 0.52 0.31 0.60 0.44 0.64 0.41 2.01 1.35 1.11 0.90 3.50 2.45 1.02 0.72 0.43 0.37 1.53 1.45 3.17 2.82 1.04 0.62 1.53 1.03 0.99 0.63 3.48 1.08 2.490.77 1.04 0.30 Asset Management Inventory Turnover Receivables Turnover Fixed Assets Turnover 37.0 16.5 1.9 85.4 43.3 1.0 5.9 13.0 2.2 85 25. 3 24 62.8 1 3.6 10.8 3.9 5.3 22.0 109.7 8.8 0.6 nmf 13.1 14. 1 n mf 7.1 .4 61.2 8.3 4.8 2.3 4.3 7.6 1.6 5.9 25 17.6 5.8 0.6 4.6 9.3 25 7.7 17.8 5.5 4.9 11.7 4.1 2 Debt Management Total Debt/Total Assets (%) LT Debt/Shareholders' Equity (9) Interest Coverage 79.6 62.4 13.6 62.9 43. 5 10. 0 66.0 9 5.2 6 .5 28.5 0. 1 nmf 58.9 44.8 97.2 29.1 0.0 nm 47.4 26.2 4.8 159.0 nimf 8.1 65.7 29.3 4.2 45.7 0.0 nmf 87.7 501.9 1.7 59.0 54.6 23.2 83.0 292.5 1. 9 24.2 5.2 74. 1 79.5 61.5 4 .9 88.7 320.9 10.2 DuPont Analysis 4 Net Profit Margin (9) Asset Turnover Return on Equity (99 11.1 0.8 46.0 10.6 0.8 23.6 19.0 0.3 19.7 10.3 1.5 219 22.8 0.9 46.2 13.83 1.1 5.8 4.9 0.3 2.9 30.12 2.4 nimf .0 0.6 8.1 (6.6) 1.0 14.8) (2.8) 0.3 (5.0) 12.1 0.6 16.1 2.0 0.4 11.2 15.3 0.5 10.4 0.6 1.8 4.9 4.2 1.7 36.2

Answer 1

Solution:-

Operating income is also referred to as Earnings before interest and taxes (EBIT). The operating margin is calculated using the following formula:

Operating margin= Operating income (EBIT)/Revenue

In the given exhibit, we have the following information for company P:

Earnings before interest and taxes (EBIT)= 8

Revenue= 100

Therefore,

Operating margin= 8/100= 8%

Hence, the operating margin of company P is 8%.