why would GENERAL AND ADMIN EXPENSE increase along side revenue?
what is their correlation?

can advertising expense increase general and admin expense? if so, how?

can international sales also increase general and admin expense? if so, how?

also, by looking at this report, what can you translate?

 

Transcribed Image Text:

Common Size Statement During this time period, general and admin expenses increased slightly between 2017 & 2018 only to decrease again by 2019. Walmart in millions) 2019 2017 2018 Turget 2019 Sales 481.317 495, 781 610.329 Sales 77.130 Total Rovonue 485.873 500.343 514.405 Total hovenue 78,112 Cost of Sales 75.00% 75.32% 75.50% Cost of Sales 71.61% Gen and Aanin esp 21.10% 21.48% 21.00% Gen and Admin exp 21.12% Depreciation Depreciation 2.99% Operating income 4.73% 4.12% 4.30% Operating income 4.73% Interest 0.47% 0.44% 0.42% Interest 0.61% Income before income taxes 4.2% 3.02% 2.22% Income before income taxes 4.94% Net Income 283% 1.99% 1.31% Net Income 3.96% Melanie Jocelin Guerrero Torly Oviedo Group Names Sarah Geraili Andrea Ruiz Andrea Gary Miler Common Size Statement During this time period, general and admin expenses increased slightly between 2017 & 2018 only to decrease again by 2019. Walmart in millions) 2019 2017 2018 Turget 2019 Sales 481.317 495, 781 610.329 Sales 77.130 Total Rovonue 485.873 500.343 514.405 Total hovenue 78,112 Cost of Sales 75.00% 75.32% 75.50% Cost of Sales 71.61% Gen and Aanin esp 21.10% 21.48% 21.00% Gen and Admin exp 21.12% Depreciation Depreciation 2.99% Operating income 4.73% 4.12% 4.30% Operating income 4.73% Interest 0.47% 0.44% 0.42% Interest 0.61% Income before income taxes 4.2% 3.02% 2.22% Income before income taxes 4.94% Net Income 283% 1.99% 1.31% Net Income 3.96% Melanie Jocelin Guerrero Torly Oviedo Group Names Sarah Geraili Andrea Ruiz Andrea Gary Miler

Answer rating: 100% (QA)

Why would GENERAL AND ADMIN EXPENSE increase along side revenue Selling general and administrative expense SGA is reported on the income statement as the sum of all direct and indirect selling expenses and all general and administrative expenses GA of a company These are the necessities and sometimes the luxuries that most companies require They include rent some salaries employee perks office supplies and much more If it doesnt directly bring in revenue its likely to be a GA expense The amount you spend on operating costs is really only relevant if you compare it with revenue A small startup will likely have lower administrative expenses than an enterprise business after all So rather than obsessing about the payments themselves you should think about them in context To make sure that your spending is under control the simplest measure is to calculate operating costs against company revenue This is also known as the efficiency ratio The formula for this is simple GA expenses Revenue x 100 Thatll tell you operating costs as a percentage of your revenue And then you can monitor changes in this percentage rather than looking at costs on their own a significant rise in the general and administration expense to revenue ratio may indicate that the investment in general and administration is not as cost effective as it should be This is mostly relevant for the CFO or Head of Finance Theyre charged with ensuring that the companys finances are under control Can advertising expense ... View the full answer