Expense Ratio (1 Viewer)

[viennamotley]

I've calculated the expense ratio (total expenses/sales) as 97.7%, but that seems really high. Would someone be able to double check that's the right answer?
[For June 28 2020]

 

[jimmysmith560]

What did you do to get this percentage?

 

[totally_screwed]

I got like 23% could be wrong who knows

 

[viennamotley]

What did you do to get this percentage?

I calculated sales to be 37784 + 108 (other income) and expenses as 36914. Then put them into the ratio. I don't know what I'm doing wrong.

 

[viennamotley]

I got like 23% could be wrong who knows

How did you get this?

 

[totally_screwed]

How did you get this?

as for sales I just used the total operating revenue 37,784. the ratio is specific to sales not all forms of input/inflow, so you shouldn't be adding "other income" imo

for expenses I did 8,081+443+341 which gave 8,864. I'm not sure if I did the expenses right but your expenses seems totally off

 

[jimmysmith560]

Ok, doing it again I got the same answer as totally_screwed. I believe you shouldn't count the cost of sales (i.e. COGS) while calculating the expense ratio. If you look at Q24 b) of the 2020 HSC, you'll notice they didn't include COGS in their calculations.

This will give us:



OR

that you should only include literal expenses, meaning those showing the word "expenses". In that case, the ratio might be a little different:



Either way, I doubt financial ratios questions will be this complex in trial exams and the HSC exam.

 

[viennamotley]

Ok, doing it again I got the same answer as totally_screwed. I believe you shouldn't count the cost of sales (i.e. COGS) while calculating the expense ratio. If you look at Q24 b) of the 2020 HSC, you'll notice they didn't include COGS in their calculations.

This will give us:



OR

that you should only include literal expenses, meaning those showing the word "expenses". In that case, the ratio might be a little different:



Either way, I doubt financial ratios questions will be this complex in trial exams and the HSC exam.

Thank you so much!! Didn't realise I shouldn't add COGS. I also doubt they'll be this complex; this is for an assessment task

 

[jimmysmith560]

Thank you so much!! Didn't realise I shouldn't add COGS. I also doubt they'll be this complex; this is for an assessment task

No worries, good luck with your assessment task!