Thanks! (c)Assume that the above profits of Toys Ltd. are identical toOperating Profit (before taxes and interest). Calculate ToysInc.'s Operating Profit Margin. Now compare thecompany's profitability against the average industrymargins shown below (Aswath Damodaran, January 2018).How do you interpret Toy's performance? Explain.Operating Profit Margin= 18 300/217 000 *100 = 8.43%With 8.43% we are below the average of 12.87%. Thus theperformance is not as great. They could do a lot better. Andthis margin is only with the new investment, with the oldoperating profit they would be doing even worse comparedto their competitors.Pre-tax Unadjusted OperatingdarginIndustry NameApparelDiversifiedEducationElectronics (General)EntertainmentFurm/Home FurnishingsHousehold ProductsPublishing & NewspapersRecreationSoftware (Entertainment)MeanMedianNet Margin343%8,54%1,38%667%11.50%5,89%13,90%1.18%212%15,97%6,82%6,28%Gross Margin49,73%20.62%41,67%29,41%41,91%10.89%12,94%833%932%20.99%9,12%18,15%760%10,90%20,55%12,87%10,90%25,90%50,87%39,29%38.6066,18%40,42%40,48% |Industry NameApparelDiversifiedEducationElectronics (General)Pre-tax Unadjusted OperatingMargin10,89%12,94%Gross Margin49,73%Net Margin3,43%20,62%8,54%41,67%29,41%41,91%25,90%1,38%6,67%11,50%5,89%13,90%-1,18%2,12%8,33%9,32%20,93%9,12%18,15%7,60%10,90%20,55%EntertainmentFurn/Home FurnishingsHousehold ProductsPublishing & NewspapersRecreationSoftware (Entertainment)MeanMedian50,87%39,29%38,60%66,18%15,97%40,42%40,48%6,82%6,28%12,87%10,90%

Ratio analysis helps the users of the financial statement to compare the performance of one company…

(c) Assume that the above profits of Toys Ltd. are identical to Operating Profit (before taxes and interest). Calculate Toys Inc.'s Operating Profit Margin. Now compare the company's profitability against the average industry margins shown below (Aswath Damodaran, January 2018). How do you interpret Toy's performance? Explain. Operating Profit Margin= 18 300/217 000 *100 = 8.43% With 8.43% we are below the average of 12.87%. Thus the performance is not as great. They could do a lot better. And this margin is only with the new investment, with the old operating profit they would be doing even worse compared to their competitors.

(c) Assume that the above profits of Toys Ltd. are identical to Operating Profit (before taxes and interest). Calculate Toys Inc.'s Operating Profit Margin. Now compare the company's profitability against the average industry margins shown below (Aswath Damodaran, January 2018). How do you interpret Toy's performance? Explain. Operating Profit Margin= 18 300/217 000 *100 = 8.43% With 8.43% we are below the average of 12.87%. Thus the performance is not as great. They could do a lot better. And this margin is only with the new investment, with the old operating profit they would be doing even worse compared to their competitors.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 1MCQ

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