Explanation:
To solve this problem, we need to:
Peer EBIT margins: 23%, 17%, 27%, 19%, 25% Sorted: 17%, 19%, 23%, 25%, 27% Median = 23% (middle value)
GutWare's revenue = 53,500 million GBP EBIT at 23% margin = 53,500 × 0.23 = 12,305 million GBP
Operating costs = Revenue - EBIT Operating costs = 53,500 - 12,305 = 41,195 million GBP
Therefore, the correct answer is B: 41,195.
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An analyst is evaluating GutWare, a European consumer goods company that is restructuring its cost structure to increase shareholder value. The analyst gathers the following summary financial data for GutWare and five peer companies:
| Revenues (GBP Millions) | EBIT (GBP Millions) | EBIT Margin (%) |
|---|---|---|
| GutWare | 53,500 | 5,885 |
| Peer 1 | 54,100 | 12,443 |
| Peer 2 | 72,200 | 12,274 |
| Peer 3 | 62,300 | 16,821 |
| Peer 4 | 75,900 | 14,421 |
| Peer 5 | 34,200 | 8,550 |
If GutWare's EBIT margin were equal to that of the peer group median, its operating costs (in GBP millions) would total:
A
41,057
B
41,195
C
41,623
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