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(a) (1)
Annual Report is a comprehensive financial report that shows all the business activities, that takes place throughout the previous financial year. Its purpose is to provide the complete information of a company’s financial activities, to its users in order to help them analyze, and take well informed decisions.
The following are the values for Company CS and Company VF.
Profit margin measures the amount of net income earned from each dollar of sales revenue generated by a company. Thus, it shows the relationship between the net income, and net sales. It is calculated by using the following formula:
To Calculate: The profit margin for the year 2014 of Company CS and Company VF.
(2)
Gross profit represents the revenue after the deduction of cost of goods sold from the net sales of a business. Its mathematical representation is as below:
To Calculate: The gross profit for the year 2014 of Company CS and Company VF.
(3)
Gross profit rate is the financial ratio that shows the relationship between the gross profit on sales and net sales. Gross profit is the difference between the total revenue and the cost of goods sold. It is calculated by using the following formula:
To Calculate: The gross profit rate for the year 2014 of Company CS and Company VF.
(4)
Operating income is the difference between the gross profit (revenue minus cost of goods sold) and operating expenses incurred during a particular year.
To Determine: The operating income for 2014 of Company CS and Company VF.
(5)
Operating income is the difference between the gross profit (revenue minus cost of goods sold) and operating expenses incurred during a particular year.
To Compute: The percentage change in operating income from 2014 to 2013 for Company CS and Company VF.
(b)
To Conclude: The relative profitability of the two companies from the above data.
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Chapter 5 Solutions
Bundle: Financial Accounting: Tools for Business Decision Making 8e Binder Ready Version + WileyPLUS Registration Code
- A company purchases a machine for $150,000. It is estimated that the machine has a useful life of 10 years and will then be sold for $12,0000. Using the straight-line method, calculate the annual depreciation expense to be charged for each year of useful life. A. $13,800 B. $1,380 C. $12,500 D. $15,000 MCQarrow_forwardWalton Chicken Corporation processes and packages chicken for grocery stores. It purchases chickens from farmers and processes them into two different products: chicken drumsticks and chicken steak. From a standard batch of 23,000 pounds of raw chicken that costs $15, 600, the company produces two parts: 4,000 pounds of drumsticks and 6,000 pounds of breast for a processing cost of $ 3,384. The chicken breast is further processed into 5,200 pounds of steak for a processing cost of $3,200. The market price of drumsticks per pound is $1.75 and the market price per pound of chicken steak is $5.20. If Walton decided to sell chicken breast instead of chicken steak, the price per pound would be $2.60. Product Allocation Rate x Weight of Base Allocated Cost Drumsticks $1.90 x 4,000 = $7,600 Chicken breast 1.90 x 6,000 = 11,400 Total allocated cost $19,000 Chicken Drumsticks Chicken Breast Revenue $7,000 $15,600 Cost of goods sold 7,600 11,400 Gross margin $(600) $4,200 Reallocate the joint…arrow_forwardPlease give me true answer this financial accounting questionarrow_forward
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
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