Profitability ratios Dr.Zhivago Diagnostics Corp. income statements for 2010 is

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Profitability ratios Dr.Zhivago Diagnostics Corp. income statements for 2010 is as follows: Sales $2,000,000 Cost of goods sold 1,400,000 Gross profit 600,000 Selling and administrative expense 300,000 Operating profit 300,000 Interest expense 50,000 Income before taxes 250,000 Taxes (30%) 75,000 Income after taxes $ 175,000 a. Compute the profit margin for 2010. b. Assume in 2011, sales increase by 10 percent and cost of goods sold increases by 20 percent. The firm is able to keep all other expenses the same. Once again, assume a tax rate of 30 percent on income before taxes. What are income after taxes and the profit margin for 2011?

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www.docstoc.com/docs/.../Chapter-3-Chapter-03-Financial account

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