Question

Hopper, Inc.Use the information from Hopper Inc. to answer the following question(s).

2017
Operating revenues $1,900,000
Operating expenses $1,400,000
Income taxes $200,000

2016
Operating revenues $1,600,000
Operating expenses $1,100,000
Income taxes $200,000
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Read the information about Hopper, Inc. Which ratio are you able to calculate given only the information provided by Hopper?

a. Gross profit percentage
b. Profit margin
c. Current ratio
d. Working capital

Answer 1

Using the financial data from Hopper, Inc., we can calculate the profit margin for 2017, which is found to be 15.79%. We are unable to calculate the gross profit percentage, current ratio, or working capital with the given data.

Step-by-step explanation:

When analyzing the financial information provided by Hopper, Inc., we can calculate the profit margin ratio. The profit margin is a ratio that shows the percentage of sales that has turned into profits, essentially the portion of revenue that remains as profit after all expenses are paid. To calculate the profit margin, we use the formula:

Profit Margin = (Net Income / Operating Revenues) x 100

For 2017, the profit margin would be calculated as follows:

(Net Income 2017 = Operating Revenues 2017 - Operating Expenses 2017 - Income Taxes 2017)

(Net Income 2017 = $1,900,000 - $1,400,000 - $200,000 = $300,000)

Profit Margin 2017 = ($300,000 / $1,900,000) x 100 = 15.79%

We cannot calculate the gross profit percentage, current ratio, or working capital because the necessary information such as cost of goods sold, current assets, current liabilities, etc., is not provided within the data.