Day 11

Apple Vs. Meta (formerly Facebook)

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Your Homework

Open the income statements from the FORD 2022 10-K and the TESLA 2022 10-K. For both companies, calculate the following metrics and answer the question referring to the year ending Dec. 31, 2022.

  1. Gross Margin (aka gross profit) Percentage

  2. Operating Income Percentage

  3. Which company is more profitable?

Scroll down to see answers.

Answers

  1. Gross Margin % = Gross Margin/Total Revenue                                                                                                                          

    Ford: Gross Margin = Total Revenue - Cost of Sales = $158,057 - $134,397 = $23,660                                                                                     $23,660/$158,057 = 15%
    Tesla: $20,853/$81,462 = 26%

  2. Operating Income % = Operating Income/Total Revenue
    Ford: $6,276/$158,057 = 4%
    Tesla: $13,656/$81,462 = 17%

  3. Tesla is more profitable. Despite Ford having twice the revenue, Tesla has better cost controls in their production and spends $0 on traditional media advertising, resulting in considerably higher gross margin and operating income % margins relative to Ford.

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