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Peregrine Exam Day 4 Questions and Verified Answers| 100% Solved
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Peregrine Exam Day 4 Questions and Verified Answers|100% Solved
Operating Margin - ✔✔profit a company makes on a dollar of sales after paying for variable
costs but
before paying any interest or taxes
Operating Margin Ratio - ✔✔operating income/sales
Operating margin is a - ✔✔profitability ratio that shows how much profit a company makes
from its core
operations in relation to the total revenues it brings in
EBIT - ✔✔is the same metric as operating income and can be used in calculating operating
margin
Operating margin helps - ✔✔investors understand how a business makes money; if its
generating
income primarily from core operations, or investments.
An increasing operating margin - ✔✔over a period of time indicates a company whose
profitability is
improving.
financial reporting - ✔✔Process of communicating information relevant to investors,
creditors, and
, others in making investment, credit, and business decisions.
What is included in financial reporting? - ✔✔income statement, statement of comprehensive
income,
balance sheet, statement of cash flows, and statement of stockholders' equity
Current Ratio - ✔✔current ratio is a liquidity ratio that measures a companies ability to pay
short-term
obligations or those due within one year.
current ratio compares - ✔✔current assets to current liabilities
Also referred to as working capital - ✔✔current ratio
Weaknesses of the current ratio - ✔✔difficulty of comparing the measure across industry
groups,
overgeneralization of specific asset and liability balances, and the lack of trending
information.
Free Cash Flow - ✔✔represents the cash available for the company to repay creditors or pay
dividends
and interest to investors
FCF reconciles - ✔✔net income by adjusting for non-cash expenses, changes in working capital
and
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