CFA Practice Question

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CFA Practice Question

Which of the following is calculated by a formula that uses net sales as the denominator?

I. Operating expense ratio
II. Gross profit rate
III. Return on assets
Correct Answer: I and II

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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