Exam 3 long ones

Question 1

3 interpretations of gross profit margin

Answer 1

the % nets sale remaining after COGS
(100% - gross margin = the % of net sales that went toward COGS
the % of net sales avail to cover ops expenses, interest exp, taxes, and a profit

Question 2

2 interpretations of net profit margin

Answer 2

% of net sales remaining as profit after all expenses

(100% - net profit margin = % of net sales that went toward all expenses

Question 3

total asset turnover formula

Answer 3

net sales / avg. total assets

Question 4

inventory turnover formula

Answer 4

net sales / avg. inventory

Question 5

fixed asset turnover formula

Answer 5

net sales / avg. net fixed assets

Question 6

debt-to-total assets ratio (2 interpretations)

Answer 6

indicates % of assets financed by debt
indicates % of assets financed by equity
% above 50 means more debt than equity

Question 7

with debt to total asset how to calc if it is using more debt than equity

Answer 7

divide liabilities by total assets = (L+OE), if percentage is more than 50, using more debt

Question 8

interpretation of debt-equity ratio

Answer 8

indicates debt capital as a multiple of equity capital

greater than 1 means more debt