Red Company: Chapter 4

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Red Company: Chapter 4


Lecture number:
37
Pages:
2
Type:
Lecture Note
School:
Miami University, Oxford
Course:
Acc 221 - Intro to Financial Accounting
Edition:
1
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Unformatted text preview:

Lecture 37 Outline of Previous Lecture  Section 36: Red Company: Chapter 3  Chapter 3 o Dupont Analysis Outline of Current Lecture  Section 37: Red Company: Chapter 4  Chapter 4 o Profitability o Cost of goods sold o Efficiency o Leverage o Interest Coverage Current Lecture  Section 37: Red Company: Chapter 4  Chapter 4 o Profitability  Gross Profit Margin %  How many cents of each $1 of net sales are left after deducting cost of goods sold  Gross profit / net sales (100) = GPM%  Better if higher  Operating Profit Margin %  How many cents of each $1 of net sales are left after deducting operating expenses from gross profits  Operating income / net sales = OPM%  Better if higher  Net Profit Margin %  Net income / net sales = NPM%  Better if higher o Cost of goods sold  Decrease, favorable impact  Purchase products more effectively  Produce efficiently  Market more effectively, increase prices o Efficiency  Accounts receivable turnover ratio ACC 221 1st Edition



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