Dr. Zhivgo Diagnostics Corp. income statements for 2013 are as follows: Sales....................................................................................... $2,790,000 Cost of goods sold.................................................................
Question:
Dr. Zhivàgo Diagnostics Corp. income statements for 2013 are as follows:
Sales....................................................................................... $2,790,000
Cost of goods sold................................................................. 1,790,000
Gross profit............................................................................ 1,000,000
Selling and administrative expense........................................ 302,000
Operating profit..................................................................... 698,000
Interest expense..................................................................... 54,800
Income before taxes............................................................... 643,200
Taxes (30%)........................................................................... 192,960
Income after taxes................................................................. $ 450,240
a. Compute the profit margin for 2013.
b. Assume in 2014, 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 is income after taxes and the profit margin for 2014?
Step by Step Answer:
a Profit margin for 2013 b Sales 3069000 Cost of goods sold 2148000 Gross prof...View the full answer
Foundations of Financial Management
ISBN: 978-1259194078
15th edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
