Operating Expenses as a Percentage of Sales

question 79

Multiple Choice

Operating expenses as a percentage of sales:
Company A: $9,600/$80,000 = 12.0%
Company B: $12,600/$180,000 = 7.0%
Company C: $10,800/$120,000 = 9.0%
Company D: $10,000/$100,000 = 10.0%
-Three of the companies are high-end department stores such as Saks Fifth Avenue.One company is a discount retailer similar to WalMart.Which company is most likely to be the discount store?

• A)Company A
• B)Company B
• C)Company C
• D)Company D

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Definitions:

Overdue Account Payable

An obligation owed by a company to a supplier for which payment has not been made within the agreed upon timeframe.

Note Payable

A written promise to pay a certain amount of money, often bearing interest, by a specified date to the holder of the note.

FICA Taxes

Taxes imposed on both employees and employers to fund Social Security and Medicare programs, based on earned wages.

Withheld

Refers to the portion of an individual’s earnings that is not directly paid to the individual by the employer, because it is set aside for purposes such as tax payments.