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How does a firm compute Profit margin?
gross profit is divided by net sales.
Cost of goods sold plus gross profit equals?
Cost of goods plus gross profit margin equals to total sales revenue of firm.
Is operating profit margin and profit margin the same?
No. Operating profit margin usually means profit in terms of strict cost and revenues of the firm itself. Actual profit margin includes other, non-firm specific costs, such as payment of debts (which is not part of operation but still a liability of the firm).
What measures how effectively a firm uses its assets to generate revenue?
The measure on how effectively a firm uses its assets to generate revenue is the profit margin. This will determine if the firm is running at a profit or at a loss.
Is the maximization of profit margin a valid finincial objective of s firm?
Yes, maximizing profit margin is a valid financial objective for a firm as it directly impacts profitability and overall financial health. A higher profit margin indicates that a company is effectively controlling its costs relative to its revenues, which can enhance competitiveness and shareholder value. However, it is essential to balance profit margin objectives with other factors such as market share, customer satisfaction, and long-term sustainability to ensure holistic business success.
Explain how return on assets decline given an increase in net profit margin?
If you look at what Return on Assets is comprised of, Net Profit Margin and the Total Asset Turnover, if the firm is having a very slow turnover, the ROA will be declining if the turnover is greater in magnitude to the NPM.
A company has an ROA of 10 percent a 2 percent profit margin and a return on equity equal to 15 percent. What is the companys total asset turnover and what is the firm's equity multiplier?
Given: ROA = 10%, Profit margin = 2%, ROE = 15% ROA = Profit margin x Asset Turnover Therefore, Asset Turnover = ROA / Profit margin = 10 / 2 = 5% ROE = Profit margin x Asset Turnover x Equity multiplier 15 = 2 x 5 x Equity Multiplier 15 / 10 = Equity Multiplier Equity Multiplier = 1.05
How do a firm calculate its profit?
A firm calculates its profit by subtracting total expenses from total revenues. Profit can be categorized into gross profit, which is revenue minus the cost of goods sold, and net profit, which accounts for all operating expenses, taxes, and interest. The formula can be summarized as: Profit = Total Revenue - Total Expenses. This calculation helps firms assess their financial performance over a specific period.
A firm break-even point will rise if?
following reasons: 1- Fixed cost increases 2 - Contribution margin reduces 3 - Required profit increases
What is 'value of a firm'?
The 'value of a firm' is connected with profit maximization. It is the present value of the firm's current profit and the future profit. It determines the value accurately.
What is a firm's value?
The 'value of a firm' is connected with profit maximization. It is the present value of the firm's current profit and the future profit. It determines the value accurately.
Question 3 1 Question 3 text A firm has a profit margin of 15 percent on sales of 20000000 If the firm has debt of 7500000 total assets of 22500000 and an after-tax in?
It's too obvious that you're trying to get us to do your homework.
