Respuesta :
Answer:
a) Net Sales $399,000
Cost of goods sold $113,000
Gross profit $286,000 ( Net sales - Cost of goods sold )
operating expenses $ 127,000
Operating income $159,000 (Gross profit - Operating expenses)
interest expense $24,857.58 (Operating income - Income before tax)
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b) 39.85%
c) 6.39
Explanation:
Given;
Sales = $399,000
Cost of goods sold = $113,000
firm's operating expenses = $ 127,000
increase in retained earnings = $53,000
common stock shares outstanding = 21,800
Dividends paid per share = $1.63
Thus,
Dividends = 21,800 × $1.63 = $35,534
Net income = Dividends + increase in retained earnings
= $35,534 + $53,000
= $88,534
Now,
income before taxes = [tex]\frac{\textup{Net income}}{\textup{1 - tax rate}}[/tex]
or
income before taxes = [tex]\frac{\textup{88,534}}{\textup{1 - 0.34}}[/tex]
= $134142.42
Thus,
Taxes = $134142.42 - $88,534 = $45,608.42
a)
Net Sales $399,000
Cost of goods sold $113,000
Gross profit $286,000 ( Net sales - Cost of goods sold )
operating expenses $ 127,000
Operating income $159,000 (Gross profit - Operating expenses)
interest expense $24,857.58 (Operating income - Income before tax)
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b) operating profit margin = [tex]\frac{\textup{Operating income}}{\textup{Net sales}}\times100\%[/tex]
or
operating profit margin = [tex]\frac{\textup{159,000}}{\textup{399,000}}\times100\%[/tex]
or
operating profit margin = 39.85%
c) Times interest earned = [tex]\frac{\textup{Operating income}}{\textup{Interest expenses}}[/tex]
or
Times interest earned = [tex]\frac{\textup{159000}}{\textup{24857.58}}[/tex]
income before interest expense and taxes/interest expense
= 6.39
