The following information is taken from the records of XYZ Company Calculate the gross profit margin...

The following information is taken from the records of XYZ Company Calculate the gross profit margin and net profit margin using the above data, and comment on the trend you observe. COGS are $189 million in 2013 and 93 million in 2012 and 66 million in 2011 and 65 million in 2010 and 50 million in 2009 gross profit is 63 million in 2013 and 48 million in 2012 and 54 million in 2011 and 60 million in 2010 and 50 million in 2009. and net profit is :12 million in 2013 and 5 million in 2012 and 15 million in 2011 and 20 million in 2010 and 15 million in 2009

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Expert Solution

Answer:-

Year	COGS	GP	Revenue (COGS+GP)	GP Margin (See formula)	NP	NP Margin (See formula)
2013	189	63	252	25%	12	4.76%
2012	93	48	141	34.04%	5	3.54%
2011	66	54	120	45%	15	12.5%
2010	65	60	125	48%	20	16%
2009	50	50	100	50%	15	15%

GP Margin Formula= [(Revenue- COGS)/Revenue] x 100

NP Margin Formula = (NP/Revenue) x 100

Revenue = COGS + GP

Working Note:-

GP Ratio:- [(Revenue- COGS)/Revenue] x 100

2013 = [(252-189)/252]x100 = 25%

2012 = [(141-93)/141]x100 = 34.04%

2011 = [(120-66)/120]x100 = 45%

2010 = [(125-65)/125]x100 = 48%

2009 = [(100-50)/100]x100 = 50%

NP Ratio :- (NP/Revenue) x 100

Year 2013 = (12/252) x 100 = 4.76%

Year 2012 = (5/141) x 100 = 3.54%

Year 2011 = (15/120) x 100 = 12.5%

Year 2010 = (20/125) x 100 = 16%

Year 2009 = (15/100) x 100 = 15%

Comment on trend:- By looking at the trend we may conclude the following things:-

1. Revenue is continuously incresing year after year

2. GP Marging is continuously declining from 50% in 2009 to 25% in 2013 it has halved.

3. NP Margin is also continuously declining from 15% in 2009 to 4.76% in 2013.

Abbrevations-

COGS- Cost of Goods Sold

GP- Gross Profit

NP- Net Profit

jeff jeffy answered 3 hours ago

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