In 2018, XYZ Inc. had sales of $36 million, costs of goods sold of $15 million,...

In 2018, XYZ Inc. had sales of $36 million, costs of goods sold of $15 million, Sales, General and Administrative (SG&A) expenses of $6 million, Depreciation expenses of $4 million, Interest expenses of $800,000, Average Tax Rate of 17%, total debt of $15 million, and total assets of $31 million. What was XYZ Inc.'s Profit Margin as of 2018?

Expert Solution

Income statement for XYZ Inc. for the year 2018 :-

Sales	$ 36,000,000
Less -Cost of goods sold	$ 15,000,000
SG&A expenses	$ 6,000,000
Less-depreciation	$ 4,000,000
EBIT	$ 11,000,000
Less-Interest expense	$ 800,000
EBT	$ 10,200,000
Less- tax@17%	$ 1,734,000
Net profit	$ 8,466,000

Profit margin = Net profit / Sales = $ 8,466,000 / 36,000,000 = 0.235166667 = 23.5166667% = 23.52%

jeff jeffy answered 2 years ago

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