entrepreneurial finance caculate question

In an effort to increase sales, Marvin’s Market has decided to increase it 2018 advertising expenses by 20%. According to Marvin’s projections, this will lead to a 12% increase in gross revenue, a 10% increase in returns, an 8% increase in cost of goods sold, and 10% increases in overhead expenses and inventory losses. Given these assumptions and Marvin’s 2017 profit and loss statement:

Marvin’s Market

Profit and Loss Statement


Sale Activities

Gross Revenue


Less returns


Net Revenue


Cost of Goods Sold


Gross Profit


Operating Expenses

Advertising expenses


Overhead expenses




Total Operating Expenses


Operating Profit




Inventory losses


Profit Before Taxes


Income Taxes


Net Profit


a. Prepare a projected 2018 profit and loss statement.

b. Calculate gross margin, operating margin, and net margin for 2017 and 2018.

c. Should Marvin increase his advertising budget?

You have to write on your own. No copy on any website. If necessary please add picture or excel work. If this question need.

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