How could two companies with similar gross profit figures end up with dramatically different net operating income?

respond to each one of those discussion statements from the two different people that are attached. agree or disagree and why with references listed or you can just add information about the topic. Basically, when we are talking about two companies having same gross profit figures but at the same time, they are having different net operating income as well, so it is depending upon the operating margin of the company. According to net operating income represents the financial strength of the company after accounting operating expenses and other cost of goods sold for the particular year. According to Investopedia Online, Financial Ratios Tutorial, There are four levels of profit and profit margins- gross profit, operating profit, pretax profit and met profit. The term œmargin can apply to the absolute number for a given profit level and/or the number as a percentage of net sales/revenue. Profit margin analysis uses the percentage calculation to provide a comprehensive measure of a company’s profitability on a historical basis and in comparison to peer companies and industry benchmarks. Another resource tells how to calculate operating margin. According to the Allstarsstock online, Key measurement of the financial strength, by Walden, G œOperating income / total revenue= operating margin. Hence, from the above references, we can easily abstract the impact of operating margin on the overall operating income of the company. Therefore, two companies having same gross profit can also have different operating income.

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