Account Name Value Accounts payable 5800 Accounts receivable 10600 Accumulated d

Question

Account Name Value Accounts payable 5800 Accounts receivable 10600 Accumulated depreciation 34000 Cash 17550 Common stock (10,000 shares) 46000 Cost of goods sold 6,750 Depreciation expense 600 Earnings before taxes ????? General & admin expense 950 Gross buildings & equipment 123000 Gross profits 26,250 Interest expense 4,300 Inventories 7500 Long-term debt 56000 Net buildings & equipment 89000 Net income ????? Operating income (EBIT) ????? Retained earnings 16150 Sales 33,000 Short-term notes payable 700 Taxes @40% 8,160

Explanation / Answer

Formula Operating Profit Margin After Taxes (Gross Profit-Operating expenses-Depreciation)*(1-tax)/sales 44.91% Gross Profit Margin Gross Profit/Sales 79.55% Average Collection Period 365*Account receivable/sales 117.24 Total Asset Turnover Sales/Asset or Sales/(Account Receivable+ Cash+ inventories+Buildings and Equipments) 0.13 Fixed Asset Turnover Sales/(Buildings and Equipments) 0.16 Inventory Turnover COGS/Inventory 0.90 Debt to Total Assets Total debt/(Account Receivable+ Cash+ inventories+Buildings and Equipments) 0.25 Times Interest Earned (Gross Profit-Operating expenses-Depreciation)/Interest 5.74

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