Financial Statement For A Company 's Core Business

1842 Words Oct 16th, 2015 8 Pages
1. by having a Good Operating Margin which is a margin ratio used in measuring a company 's pricing strategy and operating efficiency. Thus the operating margin. Measures your operating profitability, it indicates how much of each dollar of revenues used is left over after both costs of goods sold and operating expenses are considered. Operating margins are important because they measure efficiency. The higher the operating margin, the more profitable a company 's core business is. for example I Created a Mock report Called Dean 's Report I report the following Numbers on my Financial statement for my Event I held.
Net Sales: $1,000,000
Cost of Goods Sold: $700,000
Rent: $20,000
Wages: $100,000
Other Operating Expenses: $50,000
Net sales – all operating expenses = 530,000
Then Create a Formula Similar to this
Operating margin .53 = 530,000 operating income ______________________ Net sales 1,000,000
As you can see, Dean 's operating income is $530,000 (Net sales – all operating expenses). According to the formula used, Dean’s operating margin is .53. This means that 57 cents on every dollar of sales is used to pay for variable costs. Only 53 cents remains to cover all non-operating expenses or fixed costs.

2. Working Capital Ratio
The working capital ratio, also called the current ratio. Is a liquidity ratio that measures a firm 's ability to pay off its current liabilities. For example financial obligation, with their current assets.…
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