An Extract from Henman Ltd's Accounts Is Given Below

question 9

Multiple Choice

An extract from Henman Ltd's accounts is given below:
Which of the following statements is true?

• A) Henman Ltd made a gross profit margin of 40% and an operating profit margin of 15%.
• B) Henman Ltd made a gross profit margin of 60% and an operating profit margin of 15%.
• C) Henman Ltd made a gross profit margin of 40% and an operating profit margin of 25%.
• D) Henman Ltd made a gross profit margin of 60% and an operating profit margin of 25%.

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Definitions:

Functional Currency

It's the currency of the primary economic environment in which an entity operates and generates cash flows.

Exchange Rates

The price at which one currency can be exchanged for another, influencing international trade and investments.

Exchange Gain

A profit realized from the increase in value of foreign currency assets due to favorable changes in exchange rates.

Functional Currency

A company's primary currency used in its operations and financial reporting, often where the company principally generates and expends cash.