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Basic Question 6 of 8
Which of the following is calculated by a formula that uses net sales as the denominator?
II. Gross profit rate
III. Return on assets
I. Operating expense ratio
II. Gross profit rate
III. Return on assets
User Contributed Comments 6
| User | Comment |
|---|---|
| kalps | Op Expense ratio = operating expenses / Net Sales GP = Gross profit / Net Sales |
| carlos3 | ROA = (Net Income + Interest(1-t))/Average total Assets Sad Saturday night for a 25 years old boy. |
| danlan | OP expense ratio is not gross profit/net sales. Rather we have gross profit/net sales=(net sales-OP expense)/net sales=1-OP expense ratio |
| faya | gross profit = sales - COGS op ex = sales - COGS - SG&A expense So GP rate is not equal to OP EX ratio |
| johntan1979 | Careful now! COGS is not op exp, neither is sales. Op exp = SG&A exp Op exp ratio = SG&A / Sales |
| mlaique | Operating Expense Ratio: EBIT / Sales Gross Profit Ratio: Gross Profit / Sales |
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Learning Outcome Statements
calculate and interpret activity, liquidity, solvency, and profitability ratios
describe relationships among ratios and evaluate a company using ratio analysis
CFA® 2025 Level I Curriculum, Volume 3, Module 11.