(c) Assume that the above profits of Toys Ltd. are identical to Operating Profit (before taxes and interest). Calculate Toys Inc.'s Operating Profit Margin. Now compare the company's profitability against the average industry margins shown below (Aswath Damodaran, January 2018). How do you interpret Toy's performance? Explain. Operating Profit Margin= 18 300/217 000 *100 = 8.43% With 8.43% we are below the average of 12.87%. Thus the performance is not as great. They could do a lot better. And this margin is only with the new investment, with the old operating profit they would be doing even worse compared to their competitors.
(c) Assume that the above profits of Toys Ltd. are identical to Operating Profit (before taxes and interest). Calculate Toys Inc.'s Operating Profit Margin. Now compare the company's profitability against the average industry margins shown below (Aswath Damodaran, January 2018). How do you interpret Toy's performance? Explain. Operating Profit Margin= 18 300/217 000 *100 = 8.43% With 8.43% we are below the average of 12.87%. Thus the performance is not as great. They could do a lot better. And this margin is only with the new investment, with the old operating profit they would be doing even worse compared to their competitors.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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