In: Finance
A firm has net sales of $5,500,000, Cost of Goods Sold $3,500,000, Depreciation Expense of $300,000, Selling and Administrative Expenses of $500,000, Interest Expense of $200,000, and an average tax rate of 20%.
25. The firm's Net Income is:
26. The firm's Operating Margin is:
a. 14.0%
b. 21.8%
c. 33.3%
d. 67.1%
27. firm's Gross Profit Margin is:
a. 21.5%
b. 30.0%
c. 36.4%
d 50.0%
28. firm's Pre-taxable Income is:
Ans. | Particulars | Amount | |
Net sales revenue | $5,500,000 | ||
Less: Cost of goods sold | -$3,500,000 | ||
Gross margin | $2,000,000 | ||
Less: Operating expenses: | |||
Depreciation expenses | -$300,000 | ||
Selling, general & administrative expenses | -$500,000 | ||
Operating income (EBIT) | $1,200,000 | ||
Less: Interest expenses | -$200,000 | ||
Earnings before tax | $1,000,000 | ||
Less: Tax ($1,000,000 * 20%) | -$200,000 | ||
Net income | $800,000 | ||
Ans. 25 | Option d $800,000 | ||
Ans. 26 | Option b 21.8% | ||
Operating margin = Operating income / Net sales * 100 | |||
$1,200,000 / $5,500,000 * 100 | |||
21.8% | |||
Ans. 27 | Option c 36.4% | ||
Gross profit margin = Gross profit / Net sales * 100 | |||
$2,000,000 / $5,500,000 * 100 | |||
36.4% | |||
Ans. 28 | Option b $1,000,000 | ||
Pre taxable income = Earnings before taxes |