The income statement for the year ended December 31, 2007, for Mayr Melnhof Karton, an Austrian paper and packaging manufacturer, appears in Exhibit 1.11 Mayr Melnhof reports all amounts in thousands of euros (‚¬). Answer the following questions that pertain to the information in this exhibit.
a. What is Mayr Melnhof€™s largest expense on its income statement, and what is the amount?
b. What is Mayr Melnhof€™s second largest expense on its income statement, and what is the amount?
c. What is the ratio of Mayr Melnhof€™s gross margin to sales (called the gross margin percentage?
d. What amount does Mayr Melnhof report as operating profit for 2007? What amount does it report as profit before tax? What explains the difference between the two?
e. What is Mayr Melnhof€™s effective tax rate for the year? (The effective tax rate is the ratio of income tax expense to profit before tax).
f. Did Mayr Melnhof generate profit for the year, or incur a loss? Howmuch?

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Mayr Melnhof Karton Consolidated Income Statement EXHIBIT 1.11 Year ended (all amounts in thousands af EUR except share and per share data) Dec. 31, 2007 Notes Sales 1,736,959.2 (1,331,292.1) Cost of sales Gross margin 405,667.1 Other operating income Selling and distribution expenses Administrative expenses Other operating expenses Operating profit 10,7467 (172,033.4) [74,204.0) (758.2) 169,418.2 Financial expenses Financial income Share of profit (loss) of associated companies Other income (expenses) - net (9,082.9) 14,534.1 377.9 7. (4,383.4) Profit before tax 170,863.9 (54,289.9) Income tax expense Profit for the year 116,574.0