Week 2 - M1 - Pregrad

What is the main purpose of an income statement?

• To show a company's cash position

• To show the company's net assets

• To report revenues and expenses over a period

• To calculate net worth

Gross Profit is calculated as:

• Revenue – Operating Expenses

• Revenue – Cost of Goods Sold

• Revenue – Taxes

• Net Profit + Operating Expenses

Which of the following is NOT part of operating expenses?

• Salaries

• Advertising

• Depreciation

• Loan repayments

Net profit margin is calculated by:

• Net Income / Revenue

• EBIT / Total Assets

• Net Income / Total Equity

• Revenue / Net Income

What does EBIT stand for?

• Earnings Before Income and Taxes

• Earnings Before Interest and Tax

• Expenditure Before Interest and Tax

• Equity Before Interest and Tax

Which line item appears before taxes in the income statement?

• Net Income

• Cost of Goods Sold

• Earnings Before Taxes

• Operating Income

Which of these would not be found in an income statement?

• Interest Expense

• Revenue from operations

• Capital Expenditures

• Tax Expense

A high gross margin suggests:

• Low tax rate

• Strong pricing power or cost efficiency

• High operating expenses

• High financial leverage

Depreciation is deducted in which section?

• Revenue

• Gross Profit

• Operating Expenses

• Net Income

What is the final figure on the income statement?

• EBIT

• Revenue

• Net Income

• Gross Profit