Coast Hardware and Fashion Center are sole proprietorships of similar size. Also, both businesses earn similar amounts of revenue, incur similar amounts of operat- ing expenses, and earn similar net incomes. However, Coast has a higher cost of goods sold, while Fashion Center has higher interest expense. Indicate which of these companies has the higher (a) gross profit rate and (b) operating income. In each case, explain the reasons for your answer.

Coast Hardware and Fashion Center are sole proprietorships of similar size. Also, both businesses earn similar amounts of revenue, incur similar amounts of operat- ing expenses, and earn similar net incomes. However, Coast has a higher cost of goods sold, while Fashion Center has higher interest expense. Indicate which of these companies has the higher (a) gross profit rate and (b) operating income. In each case, explain the reasons for your answer.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

The method of comparators can be applied using the ratio of operating income to revenue as a basis for valuation. If operating income is negative this means operating income cannot be used to create a value multiple the value of the business is negative the value of the business is zero the business cannot be sold
Accounting information helps key stakeholders of the business to make decisions.From the following options,which one is the decision that an internal stakeholder is unlikely to make? A.Make decisions about how toset product selling price,whether to advertise and how much to spend on advertising B.Decide which products to continue to sell and when to add new products or drop old ones C.Identify what resources and employees the business needs,and to set benchmarks against which they can later measure the business's progress towards its goals D.Analyse the business's financial reports to decide whether to purchase shares of the company
Please do a comparative between one product but from two different companies or brand (this can be automobile, laptop, smart phone) in terms of total cost of ownership concept . please include real prices and numbers.
Which of the following statements is true? a. Earned income for RRSP purposes includes any interest and dividend income recelved. b. Earned income for childcare purposes includes gross employment income. c. Earned income for childcare purposes is equal to earned income for RASP purposes. d. Earned income for childcare purposes is reduced by any net business losses.
Create a financial statement for your hypothetical new business venture. Using the attached Excel template, and based on surveying a specific market place, make a best-guess estimated statement exhibiting profit and loss. In business, accuracy counts, so make sure to check and recheck your numbers before submitting your financial statements. Your grade will be based on the completeness and accuracy of the Income Statement. This is all of the information that I have. The hypothetical business is for a residential moving company.
Which of these expressions is correct? (A Profit plus operating expenses = sales (B) all of these are correct C Gross profit less operating expenses = net profit (D) Sales plus cost of sales less operating expenses = net profit
Explain how manufacturers can know (a) how many products to make, and (b) how many products to sell in order to earn a profit.
Which of the following conditions would not indicate that two business segments should be classified as a single operating segment? They have similar amounts of intersegment revenues or expenses. They have a similar distribution of products. They have similar production processes. They have similar products or services. Other:________________________________
You are asked to briefly answer the following questions:Profitability ratios are a set of ratios that indicate how profits relate to sales and the size of a company's capital, and this category includes various ratios such as: Gross Profit Margin Ratio, Net Profit Margin Ratio, Return on Assets Ratio and Return on Equity Ratio of funds. One of the top executives at the company where you work is asking for your help in understanding the following:1. How the above efficiency indicators are calculated.2. The company decided to pay cash to suppliers to achieve better purchase prices. What is the effect of this fact on the value of the aforementioned efficiency indicators?3. Could (beyond the above fact) be affected in any way positively the figures in question for the company where you work?
Which of the following statement is False for Multi-step income statement of a merchandise business? a. It helps in analyzing how well the company is performing b. It divides the expenses into Selling, General and administration expenses c. Users can see how much expense is incurred in selling the product and how much is in administering business d. It divides operating expense into Direct and Indirect expenses.
Consider the following two statements: 1. If a company uses the LIFO cost flow method for its income tax return, it must also use LIFO for its financial statements. II. If a company uses an accelerated depreciation method (i.e., double-declining balance, MACRS) for its income tax return, it can use the straight-line method for its financial statements. Which of the above statements (is) are true? O I only Il only neither statement is true. both I and II
104.