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Essay / Research Paper Abstract
A 5 page paper answering several questions about what a company should do to improve its bottom line. Its sales are down for the first nine months of the year and expenses and inventories have increased. The paper provides calculations for the company's ROI, capital turnover and gross margin, and discusses possible courses of action. Bibliography lists 4 sources.
Page Count:
5 pages (~225 words per page)
File: CC6_KSacctQues.rtf
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Unformatted sample text from the term paper:
the hardware division over the past nine months. Sales Margin A Google search returns no quantity identified as sales margin; the assumption here
is that sales margin equates either to gross margin or operating margin. Either will be beneficial to know. Gross margin is found
by dividing gross profit (sales - cost of goods sold) by total sales (Gross profit margin, n.d.). In the case in question, that translates to (sales - cost of
goods sold) ? total sales, or [$7,200,000 - (7,200,000 - 540,000)] ? 7,200,000 = ($7,200,000
- 6,600,000) ? 7,200,000 = 540,000 ? 7,200,000 = 0.075
= 7.5% Operating margin is the ratio of operating income to sales revenue (Operating Margin, n.d.), or the last part of the
above calculation, 540,000 ? 7,200,000. Operating margin also is 7.5 percent. Capital Turnover Also called equity turnover, this quantity is the result
of the "companys annual sales divided by its average stockholders equity ... The higher the ratio is, the more efficiently a company is using its capital" (Capital Turnover, n.d.).
Capital turnover for the nine-month period is 7,200,000 ? 9,000,000 = 0.8. ROI Return on investment is calculated by dividing income by stock
equity plus long-term debt (ROI, n.d.). ROI for the nine-month period is 540,000 ? 9,000,000 = 0.06, or 6 percent. This is extremely low and indicates that the
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