In supplying private-label footwear to chain retailers, the sizes of a company's margins over direct costs (as reported on p. 6 of each issue of the fir) should be viewed as
Answers
In supplying private-label footwear to chain retailers, the sizes of a company's margins over direct costs (as reported on p. 6 of each issue of the FIR) should be viewed as the net profit a company earns on each pair of private-label footwear sold.
It shows how much each pair of private-label footwear sold ads to the company's pretax profits, assuming that the company's margins on branded footwear were sufficient to cover all administrative expenses and all interest costs.
The gross profit a company earns on each pair of private-label footwear sold.
The company received from each pair of private-label footwear sold over and above materials costs and direct labor costs-- these dollars are automatically deposited in the company's retained earnings account and help boost the company's credit rating.
Cash that can be used to pay down long-term debt or increase dividend payments or be deposited in the company's retained earnings (to strengthen the company's balance sheet).