Calculate the gross margin percent (gross profit divided by revenues), operating profit percent (operating income divided by
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Question:
- Calculate the gross margin percent (gross profit divided by revenues), operating profit percent (operating income divided by revenues) and the net profit percent (net income divided by revenues) if the numbers are available. These ratios tell you how much of each kind of profit you get for every $1 in revenues. Of course, the higher the profit, the better. This is also called vertical analysis. Comment on your results. Negative ratios are not meaningful.
- Calculate the growth rate in each of these margins (horizontal analysis) over the past two years.
Related Book For
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
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