Question

INCOME STATEMENT FOR NKUTO CORP.
2015
2016
2017
2018
Revenue
3,200,000
3,750,000
3,913,000
4,170,000
Cost of goods sold
1,920,000
2,025,000
2,110,000
2,095,500
Gross profit
1,280,000
1,725,000
1,803,000
2,074,500
Administrative overhead:
Legal staff wages
315,000
452,000
465,300
492,000
Telephone
118,000
134,000
148,200
134,000
Insurance
99,000
107,000
109,000
113,300
Travel costs
112,000
123,000
127,900
125,000
Consulting expenses
138,000
141,000
136,700
144,200
Permits and licenses
93,000
98,000
99,500
97,000
Total Administrative Expenses
875,000
1,055,000
1,086,600
1,105,500
Earnings Before Interest, Tax and Depreciation
405,000
670,000
716,400
969,000
Interest
32,000
29,000
33,100
34,200
Taxes
128,000
134,000
129,800
139,000
Depreciation
57,000
53,000
59,900
68,800
Net profit
188,000
454,000
493,600
727,000
Required:
Calculate and comment on the following:
(a) Gross profit margin for 2016
(b) Net profit margin 2017
(c) Gross profit margin for 2018
(d) Net profit margin for 2018
(e) What is your opinion for investors who have expressed interest to capitalize the firm?

(f) If the money owned to suppliers by Nkuto Corp. in 2015 happened to be ¢2,040, whereas purchases done on credit amounted to ¢28,950. Determine the organization’s Average Payment Period.

Answer 1