With projected revenues of $10 billion, a gross profit margin of 65%, and projected SG&A expenses of $2 billion, what is the company's operating (EBIT) margin?

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Multiple Choice

With projected revenues of $10 billion, a gross profit margin of 65%, and projected SG&A expenses of $2 billion, what is the company's operating (EBIT) margin?

Operating margin shows how much of revenue remains after covering production costs and operating expenses, i.e., EBIT divided by revenue. With revenue of 10 billion and a gross profit margin of 65%, gross profit is 0.65 × 10 = 6.5 billion. Subtract SG&A of 2 billion to get EBIT of 6.5 − 2 = 4.5 billion. Then EBIT margin = EBIT / Revenue = 4.5 / 10 = 0.45, or 45%.

With projected revenues of $10 billion, a gross profit margin of 65%, and projected SG&A expenses of $2 billion, what is the company's operating (EBIT) margin?

Prepare for your Financial Statement Modeling Test. Utilize flashcards and multiple choice questions with detailed explanations. Ace your exam with thorough preparation!

With projected revenues of $10 billion, a gross profit margin of 65%, and projected SG&A expenses of $2 billion, what is the company's operating (EBIT) margin?

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