Based on the information, the operating profit margin would be A 32.4% B 28.1% C

Question

Based on the information, the operating profit margin would be A 32.4% B 28.1% C 17.5% Garland Company Balance Sheet Assets: Cash and marketable securities Accounts receivable Inventories Prepaid expenses Total current assets Fixed assets $500,000 800,000 50,000 1,350,000 $2,700,000 5,000,000 Less: accum. depr. (2,000,000) Net fixed assets Total assets $3,000,000 $5,700,000 Liabilities: Accounts payable Notes payable Accrued taxes Total current liabilities Long-term debt Owner's equity Total liabilities and owner's equity $5,700,000 $400,000 900,000 75,000 $1,375,000 1,200,000 3,125,000 $8,000,000 (3,500,000) Net sales (all credit) Less: Cost of goods sold Selling and administrative expense Depreciation expense Interest expense Earnings before taxes Income taxes Net income (2,000,000) (250,000) (150,000) 2,100,000 (700,000) $1,400,000 Common stock dividends Common Shares Outstanding $500,000 1,000.000

Explanation / Answer

Operating Profit margin = (Earnings before interest and taxes / Net sales) x 100

or, Operating Profit margin = [ (Earnings before taxes + Interest) / Net sales ] x 100

or. Operating Profit margin = [ ($2,100,000 + $150,000) / $8,000,000 ] x 100 = 28.125% or 28.1% (Option B)

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.