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Ratio analysis and working cap management
Financial Management
For question 5.13 we have found operating expenses by doing Sales -Cogs -Net profit(before taxes).In this process they have ignored to include cogs in operating expenses ,but in question 2.8 ,they have taken cogs in total operating expenses, what is happening here?
Answers (10)
(Updated)
EBIT = Revenue - COGS - Other operating expenses. Other operating expenses refer to expenditures that are not directly tied to the production of goods or services, such as rent, utilities, office supplies, and legal costs. In one question, it was given as production cost, which must be included in COGS. In other, it was given as operating expense
Yoga Vishnu
(Updated)
EBIT = Revenue - COGS - Other operating expenses. Other operating expenses refer to expenditures that are not directly tied to the production of goods or services, such as rent, utilities, office supplies, and legal costs. In one question, it was given as production cost, which must be included in COGS. In other, it was given as operating expense
In question 5.13 how can operating expenses be included in cogs as production cost?Here operation expense is the difference between Gross profit and net profit.
Thread Starter
pradyumna hariramaniIn question 5.13 how can operating expenses be included in cogs as production cost?Here operation expense is the difference between Gross profit and net profit.
How can we say that a part of operating expense is given in cogs?
Thread Starter
pradyumna hariramaniIn question 5.13 how can operating expenses be included in cogs as production cost?Here operation expense is the difference between Gross profit and net profit.
(Updated)
It is not the difference between Gross and net profit. EBIT = Revenue - COGS - Other operating expenses 8,10,000 = 60,00,000 - 18,00,000 - Operating expenses Operating Expenses = Rs. 33,90,000
Yoga Vishnu
(Updated)
It is not the difference between Gross and net profit. EBIT = Revenue - COGS - Other operating expenses 8,10,000 = 60,00,000 - 18,00,000 - Operating expenses Operating Expenses = Rs. 33,90,000
By doing this for question 2.8 operating expenses =2.5 lakhs. Ebit =revenue less cogs less operating exp 2.5 lakhs =20 lakhs - 15 lakhs -operating exp Operating exp=2.5 lakhs
Thread Starter
pradyumna hariramaniWhy show 17.5 lakhs
For COGS, add other operating expenses. You will get total operating expenses
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