Question

A company provided the following select GAAP data and non-GAAP disclosures:

Select Income Statement (GAAP) Data
($ in millions)
	2019A
Revenue	732
Cost of goods sold	149
Gross profit	583

non-GAAP Disclosures
($ in millions)	2019A
GAAP Net income	(91)
Amortization of purchased intangible assets	6
Stock based compensation	51
Restructuring expenses	184
Losses on investments	14
Tax impact of non-GAAP items	(65)
non-GAAP Net income	99
Stock based compensation
($ in millions)	2019A
Cost of goods sold	16
Research & development	12
Other operating expenses	23
Stock based compensation	51
Amortization of purchased intangible assets
($ in millions)	2019A
Cost of goods sold	5
Other operating expenses	1
Amortization of purchased intangible assets	6

Assuming all restructuring expenses were allocated to “Other Operating Expenses,” what is 2019 non-GAAP gross profit margin?

• 82.5%
• 81.8%
• 81.1%
• 76.8%

no other information needed, is A or B

Answer 1

Gross profit margin = (Sales - Cost of Goods Sold) / Sales

= [732 - (149-16-5)] / 732

= 604 / 732

= 82.5%

Option A

Comment if you face any issues