The following information was drawn from the annual reports of two companies. Company A Company B...
Question:
The following information was drawn from the annual reports of two companies.
| Company A | Company B | |
| Sales revenue | $1,000 | $2,000 |
| Cost of goods sold | $(600) | $(1100) |
| Gross margin | $400 | $900 |
| Operating expenses | $(220) | $(700) |
| Operating income | $180 | $200 |
| Gain on sale of equipment | $150 | $0 |
| Net Income | $330 | $200 |
Based on this information, Company B's return on sales is:
a. 55%.
b. 45%.
c. 35%.
d. 10%.
Return on Sales:
Return on sale is a financial ratio that compares the operating income of the company with the total sales revenue. The formula is:
{eq}Return \ on \ sales \ = \ \dfrac{Operating \ income}{Sales \ revenue} \ \times \ 100 {/eq}
Answer and Explanation: 1
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View this answerThe company B's return on sales is 10% (d)
The calculation is shown below.
{eq}Return \ on \ sales \ = \ \dfrac{Operating \ income}{Sales \ revenue}...
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Sales Returns & Allowances Journal Entries
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Chapter 7 / Lesson 33
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Sales returns and allowances must be properly tracked by accounting using journal entries. Review the process for recording sales returns and allowances with examples.
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