Using the income statement for Times Mirror and Glass Co., compute the following

Question

Using the income statement for Times Mirror and Glass Co., compute the following ratios: TIMES MIRROR AND GLASS COMPANY Sales Cost of goods sold Gross profit Selling and administrative expense Lease expense Operating profit* Interest expense Earnings before taxes Taxes (30%) Earnings after taxe:s *Equals income before interest and taxes. $223,000 130,000 $ 93,000 44,000 19,100 $ 29,900 10,600 $ 19,300 7,720 $ 11,580 a. Compute the interest coverage ratio. (Round your answer to 2 decimal places.) Interest coverage 2.82 times

Explanation / Answer

Ans c) profit margin = net profit (EAT)/ sales

= 11580/223000 = 5.19%

Ans d) total asset turnover ratio = sales/total asset

= 223000/174000 = 1.28 times

Ans d) Return on assets = earning after tax/total asset

= 11580/174000 = 6.66%

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