Question

In: Finance

While analyzing Greenthumb Company finances, Pat realized that she was missing the company's net profits after...

While analyzing Greenthumb Company finances, Pat realized that she was missing the company's net profits after taxes for the current year. Find the company's net profits after taxes using the following information.

Return on total assets = 9%

Total asset turnover = 0.86

Cost of goods sold = $265,000

Gross profit margin = 0.26

Answers:

A.) $2,100

B.) $6,000

C.) $31,500

D.) $52,500

Expert Solution

Sales

Sales = Cost of goods sold / (1 - Gross profit ratio)

Sales = $265,000 / (1 - 0.24)

Sales = $265,000 / 0.74

Sales = $358,108.11

Total Assets

Total Assets = Sales / Total asset turnover

Total Assets = $358,108.11 / 0.86

Total Assets = $416,404.78

Net Profit After Tax

Net Profit After Tax = Total Assets x Return on total assets

Net Profit After Tax = $416,404.78 x 9.00%

Net Profit After Tax = $37,476.43

The right answer choice is $37,476.43, but it is not there in the given answer choices.

Hence, the company's net profits after taxes will be $37,476.43

jeff jeffy answered 2 years ago

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