MGMT 113 Chapter Notes - Chapter 3: Earnings Before Interest And Taxes, Gross Margin
Document Summary
They buy the merchandise they sell from companies called suppliers. The goods purchased for resale are called merchandise inventory. Merchandising businesses include retail companies (companies that sell goods to the final consumer) and wholesale companies (companies that sell to other businesses). Gross margin - the difference between the sales revenue and the cost of the goods sold. Gain - indicates profit resulting from transactions that are not likely to regularly recur. Loss - indicates expense resulting from transactions that re not likely to regularly recur. Operating income = gross margin - operating expenses. Operating income is the amount of income that is generated from the normal recurring operations of a business. Items that are not expected to recur on a regular basis are subtracted from the operating income to determine the amount of net income. Multistep income statements - income statements that show additional relationships between operating income and net income, etc - used more frequently in practice.
