a) GP is Incresed. Hence, there should be increase in Sale. b) NP is Incresed. However, it is not to the Proportionate of GP. So, there is a Variable Increase in Costs. c) ROI is Incresed because of Earnings Increased. d) EPS is Incresed by Rs.0.38. Hence there is a benefit to Share Holders.
02 December 2009
Hi Bharti, the answer is, 1) GP has increased, it means either COGS has reduced or sales/selling price has increased. 2) since GP has increased, increased in ROI is obvious. However, increase in ROI is more than increase in GP, it means the co. must be exercising effective control on its Admn and Selling and distribution exp. 3)Due to higher GP and ROI, NP has increased. 4) due to increased NP and no. of shares remaining the same, EPS available to shareholders has increased by Rs. 0.38. this has increased shareholders equity.
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