Homework Answers
The correct answer is OPTION A i.e The net profit margin will likely to be negative.
Explanation
Operating expenses are such expenses which are related to various operations of the business. These expenses are deducted from gross profit margin to get a net profit of the business. Examples of operating expenses are : travelling expenses, telephone and internet expenses, legal expenses, office supplies etc.
Business gross margin is the margin between the net sales minus the cost of goods sold. Cost of goods sold includes all the costa of raw material, labour/wages etc before deducting selling, general and administrative costs.
Conclusion : The likely impact if a business's
gross margin is less than its operating expenses percentage is the
net profit margin will likely to be negative.
As we know to get net profit margin all the operating expenses are
to be deducted from the gross profit margin.
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QUESTION 4 a business's gross margin is less than its operating expense percentage, what will be...
New Message Recipients Subject If a business's gross margin exceeds its operating expense percentage, wha a....
New Message Recipients Subject If a business's gross margin exceeds its operating expense percentage, wha a. The net profit margin will likely be negative. b. Operating profit will likely be negative. c. No income taxes will likely be owed for several periods after the period in questige d. Operating profit will likely be positive
Contribution margin ratio Gross margin ratio Margin of safety percentage Degree of operating leverage 40% 60%...
Contribution margin ratio Gross margin ratio Margin of safety percentage Degree of operating leverage 40% 60% 10% If O'Riley's sales increase by 25%, by what percentage will its net operating income increase? a. 40% b. 160%. c. 240%. d. 100%.
QUESTION 13 1. Why is it important to compare a business's operating expense percentage to industry...
QUESTION 13 1. Why is it important to compare a business's operating expense percentage to industry benchmarks 1. It helps management do a better job of collecting receivables II. It helps determine the business's financial risk III. It reflects how well the business is managing its expenses compared to its peers. IV. It provides important insight into management integrity a. I and II only. b. I and III only. c. II and III only. d. III and IV only
QUESTION 6 What might it suggest if a business's gross margin decreases from one period to...
QUESTION 6 What might it suggest if a business's gross margin decreases from one period to the ne 1. The company's cost structure is very flexible. II. The business has experienced product cost increases III. Management has not built sufficient flexibility into the business's cost structure IV. The business has benefited from weak competition in its marketplace a. I and IV only. b. I and II only. c. II and III only.
0 Income statement 2016 2015 Sales revenues Less: Cost of goods sold Gross profit Less: Operating...
0 Income statement 2016 2015 Sales revenues Less: Cost of goods sold Gross profit Less: Operating expenses Operating income Less: Interest expense Income before income taxes (amounts in thousands) 2017 211,400 $ 182,910 105,000 96,000 106,400 $ 86,910 53,000 46,000 53.400 $ 40,910 5.385 6,459 48,015 $ 34,451 22.617 16. 160 Print Done i Income statement JJUJ 0,435 LESS. Merest expense Income before income taxes 48,015 $ 22,647 25,368 $ 34,451 16,160 Less: Income tax expense Net income 18,291 Additional...
QUESTION 9 1. What does the operating expense percentage measure? a. The amount of profit left...
QUESTION 9 1. What does the operating expense percentage measure? a. The amount of profit left in a business after deducting cost of goods sold from b. The relative amount of operating expenses (excluding financing costs) incurred comparte goods sold. c. The percentage of sales incurred for operating expenses and income taxes d. The percentage of sales absorbed by operating expenses, excluding interest
Sales Less: Cost of goods sold Gross profit Less: Operating expenses Net operating income Less: Interest...
Sales Less: Cost of goods sold Gross profit Less: Operating expenses Net operating income Less: Interest expense Earnings before taxes Less: Taxes (35%) Net income 4,500,000 (3,500,000) 1,000,000 (500,000) $500,000 (100,000) $400,000 (140,000) $260,000 We were unable to transcribe this imageCurrent assets Net fixed assets Total Assets $500,000 Liabilities ,500,000 Owners equity $1,000,000 1,000,000 $2,000,000 $2,000,000 Total
Calculate gross profit margin (gross profit/revenues) and operating profit margin (operating profit/revenues) for Callaway Golf Company...
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...
On the multiple-step income statement, "gross profit" (also known as "gross margin") is calculated as follows:...
On the multiple-step income statement, "gross profit" (also known as "gross margin") is calculated as follows: Select one: a. Net revenues less cost of goods sold less operating expenses b. Net revenues less all expenses c. Net revenues less cost of goods sold d. Net revenues less cost of goods sold less operating expenses less income tax expense
Calculate gross profit margin (gross profitirevenues) and operating profit margin (operating profit/revenues) for Callaway Golf Company...
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...
New Message Recipients Subject If a business's gross margin exceeds its operating expense percentage, wha a. The net profit margin will likely be negative. b. Operating profit will likely be negative. c. No income taxes will likely be owed for several periods after the period in questige d. Operating profit will likely be positive
Contribution margin ratio Gross margin ratio Margin of safety percentage Degree of operating leverage 40% 60% 10% If O'Riley's sales increase by 25%, by what percentage will its net operating income increase? a. 40% b. 160%. c. 240%. d. 100%.
QUESTION 13 1. Why is it important to compare a business's operating expense percentage to industry benchmarks 1. It helps management do a better job of collecting receivables II. It helps determine the business's financial risk III. It reflects how well the business is managing its expenses compared to its peers. IV. It provides important insight into management integrity a. I and II only. b. I and III only. c. II and III only. d. III and IV only
QUESTION 6 What might it suggest if a business's gross margin decreases from one period to the ne 1. The company's cost structure is very flexible. II. The business has experienced product cost increases III. Management has not built sufficient flexibility into the business's cost structure IV. The business has benefited from weak competition in its marketplace a. I and IV only. b. I and II only. c. II and III only.
0 Income statement 2016 2015 Sales revenues Less: Cost of goods sold Gross profit Less: Operating expenses Operating income Less: Interest expense Income before income taxes (amounts in thousands) 2017 211,400 $ 182,910 105,000 96,000 106,400 $ 86,910 53,000 46,000 53.400 $ 40,910 5.385 6,459 48,015 $ 34,451 22.617 16. 160 Print Done i Income statement JJUJ 0,435 LESS. Merest expense Income before income taxes 48,015 $ 22,647 25,368 $ 34,451 16,160 Less: Income tax expense Net income 18,291 Additional...
QUESTION 9 1. What does the operating expense percentage measure? a. The amount of profit left in a business after deducting cost of goods sold from b. The relative amount of operating expenses (excluding financing costs) incurred comparte goods sold. c. The percentage of sales incurred for operating expenses and income taxes d. The percentage of sales absorbed by operating expenses, excluding interest
Sales Less: Cost of goods sold Gross profit Less: Operating expenses Net operating income Less: Interest expense Earnings before taxes Less: Taxes (35%) Net income 4,500,000 (3,500,000) 1,000,000 (500,000) $500,000 (100,000) $400,000 (140,000) $260,000 We were unable to transcribe this imageCurrent assets Net fixed assets Total Assets $500,000 Liabilities ,500,000 Owners equity $1,000,000 1,000,000 $2,000,000 $2,000,000 Total
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...
On the multiple-step income statement, "gross profit" (also known as "gross margin") is calculated as follows: Select one: a. Net revenues less cost of goods sold less operating expenses b. Net revenues less all expenses c. Net revenues less cost of goods sold d. Net revenues less cost of goods sold less operating expenses less income tax expense
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...
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