Evaluate Brown's 5.5% earnings on sales.
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Please help answer the following question regarding sales revenue.
Brown Company earned 5.5% on sales in 2007. What further information would be needed to evaluate this result? Provide a list of questions that could provide a basis for evaluation.
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Solution Summary
This posting helps with a problem about sales revenue. The solution asks 15 questions for additional information that could provide a basis for an opinion or evaluation of Brown's results.
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Problem: Brown Company earned 5.5% on sales in 2007. What further information would be needed to evaluate this result?
Solution:
To make any sense of this question, anyone analyzing the Brown Company would need to know some or all of the following:
1. Is the basis of accounting accrual in the current and past years to comply with the matching principle?
2. Does the 5.5% represent net income? Hopefully it is not the gross margin percentage.
3. Does the 5.5% represent operating income before extraordinary items, and income tax?
4. Maybe the 5.5% is comprehensive income?
5. What type of ...
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