Use the following information on Firm A and B to answer the questions 1, 2 and 3
ID: 2625199 • Letter: U
Question
Use the following information on Firm A and B to answer the questions 1, 2 and 3:
Firm A
Firm B
Revenue
230,000
390,000
COGS
92,000
175,500
Operating Expenses
120,000
150,000
Net Income
6,300
22,575
Total Assets
50,000
215,000
Equity
20,000
150,000
1.Calculate the Gross Profit (in dollars) and Gross Profit Margin for A and B.
2.Calculate EBIT and Operating Profit Margin for A and B.
3.Calculate ROA and ROE for A and B.
Firm A
Firm B
Revenue
230,000
390,000
COGS
92,000
175,500
Operating Expenses
120,000
150,000
Net Income
6,300
22,575
Total Assets
50,000
215,000
Equity
20,000
150,000
Explanation / Answer
Revenue 230000 390000 COGS 92000 175500 operating expense 120000 150000 Net Income 6300 22575 Total Asset 50000 215000 Equity 20000 150000 Gross profit(Revenue-COGS) 138000 214500 Gross profit marsin=Gross profit/revenue 60.000% 55.000% EBIT(Gross profit-operating expense 18000 64500 Operating profit margin= EBIT/Revenue 7.826% 16.538% ROA= Net income/ Asset 12.600% 10.500% ROE= Net income/Equity 31.500% 15.050%
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