Calculate the Gross Margin of both companies and interpret which one is doing better.

If a company's Gross Margin was reported as 25% at the end of the previous year and was reported as 23.6% at the end of the following year, what changes have occurred in the company's GPM and what are the possible causes? this change?

Company ABC Income Statement (thousands)	Company XYZ Income Statement (thousands)
income $150 Cost of goods sold $23	income $250 Cost of goods sold $25
Gross profit $80 Operating expenses $25	Gross profit $180 Operating expenses $40
Operating profit $70 Interest expense $5	Operating profit $150 Interest expense $15
Earnings before tax $50 Tax expense $20 Net income $30	Earnings before tax $150 Tax expense $50 Net income $80

Exercise 2

Keely Jackson owns a small business in Georgetown that sells shoes and sneakers to predominantly female customers. Keely's most recent Profit and Loss Account (Income Statement) is shown below:

sales revenue	50.000 $
Cost of sales	30.000 $
Gross profit	20.000 $
Expenses	15.000 $
net income	5.000 $

Calculate the Operating Profit Margin for Keely Jackson.

Exercise 3

The following information is taken from a company's Income Statement recorded on December ^{31 , 2015.} Prepare the operating profit margin.

For the Quarter Ended ^{31 December 2015 (in Thousand)}

1. Sale $8,158

2. Cost of Sales/Revenue $4,895

3. Gross Profit $3,263

4. General and Administrative Expenses $367

5. Rental/Lease Expense $188

6. Personnel Expense $816

7. Bad Debt Expense $33

8. Operating Expense $1,468

9. Total Operating Expense $2,872

10. Net Operating Profit of $391

11. Interest Expense $122

12. Total Other Income (Expense) $122

13. Net Profit $269