
XYZ Electronics Store reported a gross profit of $70,000 for the year. The store had several operating expenses, including employee salaries, rent, and utilities, which totaled $45,000. To determine the financial health of XYZ Electronics Store, you need to calculate the net income by subtracting the operating expenses from the gross profit. Once you have the net income, evaluate whether the store is in a strong financial position based on this information.Using the formula for net income, calculate the net income for XYZ Electronics Store. Based on your calculation, do you think the store is in a strong financial position? Explain your answer.

### Net Income Calculation

The formula for net income is:

\[
\text{Net Income} = \text{Gross Profit} - \text{Operating Expenses}
\]

Given:
- Gross Profit = $70,000
- Operating Expenses = $45,000

Now, we can calculate the net income:

\[
\text{Net Income} = 70,000 - 45,000 = 25,000
\]

### Financial Health Evaluation

The net income is **$25,000**, which represents the profit left after covering the store’s operating expenses.

#### Financial Position Assessment:
- **Positive Net Income**: Since the store has a positive net income of $25,000, it suggests that the business is profitable after accounting for all operating costs.
- **Operating Efficiency**: The store was able to retain a reasonable amount of profit (35.7% of the gross profit), which indicates it is operating efficiently.
  
#### Conclusion:
Based on the net income alone, XYZ Electronics Store appears to be in a **strong financial position**. However, additional factors like cash flow, debt, market competition, and future growth potential should also be considered for a comprehensive evaluation.

Would you like further details or have any questions?

Here are five related questions to explore:
1. How does net income differ from gross profit?
2. What are some typical operating expenses that can affect net income?
3. What is an ideal profit margin for retail stores?
4. How does net income impact the store’s long-term financial health?
5. What are some ways XYZ Electronics Store can increase its net income?

**Tip:** Always analyze net income in the context of cash flow and future expenses to get a full picture of financial health.

XYZ Electronics Store reported a gross profit of $70,000 for the year. The store had several operating expenses, including employee salaries, rent, and utilities, which totaled $45,000. To determine the financial health of XYZ Electronics Store, you need to calculate the net income by subtracting the operating expenses from the gross profit. Once you have the net income, evaluate whether the store is in a strong financial position based on this information. Using the formula for net income, calculate the net income for XYZ Electronics Store. Based on your calculation, do you think the store is in a strong financial position? Explain your answer.

Learn how to calculate the net income for XYZ Electronics Store, which has a gross profit of $70,000 and total operating expenses of $45,000. This step-by-step guide covers the formula used and evaluates the store's financial position. Suitable for students in Grades 6-8.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation