BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

Solutions

Chapter
Section
BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
57 views

Ratio Analysis

The following information was taken from Logsden Manufacturing’s trial balances as of December 31, 2018, and December 31, 2019.

Chapter 5, Problem 77E, Ratio Analysis The following information was taken from Logsden Manufacturings trial balances as of

Required:

1. Calculate the gross profit margin and operating margin percentage for 2019. ( Note: Round answers to two decimal places.)

2. Assuming that all of the operating expenses are fixed (or, won’t change as sales increase or decrease), what will be the operating margin percentage if sales increase by 25%?

To determine

(a)

Gross profit margin ratio:

The gross margin ratio is a type of profitability ratio which is used to measure the returns and earning after direct expenses and compute the ratio in respect to the sales of the business.

Operating margin:

The operating margin is the ratio which is used to measure the efficiency of the operations of the business. It is computed by dividing the operating income with the net sales.

To calculate:

The gross profit margin and operating margin for 2019.

Explanation

The Logsden Manufacturing has a net sale of $2,67,000 ($2,79,000$12,000), cost of goods sold of $1,44,000 and operating income is of $25,000. This is given in the question.

The computation of gross profit margin is as follows:

Gross Profit Margin=Gross ProfitNet Sales×100=( Net SalesCost of goods sold)Net Sales

To determine

(b)

Operating margin:

The operating margin is the ratio which is used to measure the efficiency of the operations of the business. It is computed by dividing the operating income with the net sales.

To calculate:

The operating margin ratio.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started
Ch-5 P-11DQCh-5 P-12DQCh-5 P-13DQCh-5 P-14DQCh-5 P-15DQCh-5 P-16DQCh-5 P-17DQCh-5 P-18DQCh-5 P-19DQCh-5 P-20DQCh-5 P-21DQCh-5 P-22DQCh-5 P-23DQCh-5 P-1MCQCh-5 P-2MCQCh-5 P-3MCQCh-5 P-4MCQCh-5 P-5MCQCh-5 P-6MCQCh-5 P-7MCQCh-5 P-8MCQCh-5 P-9MCQCh-5 P-10MCQCh-5 P-11MCQCh-5 P-12MCQCh-5 P-13MCQCh-5 P-14MCQCh-5 P-15MCQCh-5 P-16MCQCh-5 P-17MCQCh-5 P-18MCQCh-5 P-19MCQCh-5 P-20MCQCh-5 P-21CECh-5 P-22CECh-5 P-23CECh-5 P-24CECh-5 P-25CECh-5 P-26CECh-5 P-27CECh-5 P-28CECh-5 P-29CECh-5 P-30CECh-5 P-31CECh-5 P-32CECh-5 P-33CECh-5 P-34CECh-5 P-35CECh-5 P-36CECh-5 P-37CECh-5 P-38CECh-5 P-39BECh-5 P-40BECh-5 P-41BECh-5 P-42BECh-5 P-43BECh-5 P-44BECh-5 P-45BECh-5 P-46BECh-5 P-47BECh-5 P-48BECh-5 P-49BECh-5 P-50BECh-5 P-51BECh-5 P-52BECh-5 P-53BECh-5 P-54BECh-5 P-55BECh-5 P-56BECh-5 P-57BECh-5 P-58BECh-5 P-59BECh-5 P-60ECh-5 P-61ECh-5 P-62ECh-5 P-63ECh-5 P-64ECh-5 P-65ECh-5 P-66ECh-5 P-67ECh-5 P-68ECh-5 P-69ECh-5 P-70ECh-5 P-71ECh-5 P-72ECh-5 P-73ECh-5 P-74ECh-5 P-75ECh-5 P-76ECh-5 P-77ECh-5 P-78ECh-5 P-79APSACh-5 P-80APSACh-5 P-81APSACh-5 P-82APSACh-5 P-83APSACh-5 P-84APSACh-5 P-85APSACh-5 P-86APSACh-5 P-87APSACh-5 P-88APSACh-5 P-79BPSBCh-5 P-80BPSBCh-5 P-81BPSBCh-5 P-82BPSBCh-5 P-83BPSBCh-5 P-84BPSBCh-5 P-85BPSBCh-5 P-86BPSBCh-5 P-87BPSBCh-5 P-88BPSBCh-5 P-89.1CCh-5 P-89.2CCh-5 P-89.3CCh-5 P-90.1CCh-5 P-90.2CCh-5 P-90.3CCh-5 P-91CCh-5 P-92.1CCh-5 P-92.2CCh-5 P-93.1CCh-5 P-93.2CCh-5 P-94.1CCh-5 P-94.2CCh-5 P-95.1CCh-5 P-95.2CCh-5 P-95.3CCh-5 P-95.4CCh-5 P-95.5CCh-5 P-95.6CCh-5 P-95.7CCh-5 P-96.1CCh-5 P-96.2CCh-5 P-96.3CCh-5 P-96.4CCh-5 P-96.5CCh-5 P-96.6CCh-5 P-97.1CCh-5 P-97.2C

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What is trade associations role in encouraging ethics?

Foundations of Business (MindTap Course List)

List and describe the three control strategies proposed for IDPSs.

Principles of Information Security (MindTap Course List)

Explain why database design is important.

Database Systems: Design, Implementation, & Management

What is a DBMS, and what are its functions?

Database Systems: Design, Implementation, & Management

Under the CAFE standards, for what are vehicles tested?

Automotive Technology: A Systems Approach (MindTap Course List)

When would a radial-arm drill press most likely be used?

Precision Machining Technology (MindTap Course List)

What is a lightweight metal?

Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)

Will online transactions eventually replace person-to-person contact? Why or why not?

Systems Analysis and Design (Shelly Cashman Series) (MindTap Course List)

Convert P = 5.00 atm into Pa, bar, and psia.

Fundamentals of Chemical Engineering Thermodynamics (MindTap Course List)

What are the advantages of keeping your browsing history? If you do keep your browsing history, how long do you...

Enhanced Discovering Computers 2017 (Shelly Cashman Series) (MindTap Course List)