Complete the steps below using cell references to given data or previous calculations. In some cases, a simple cell reference is all you need. To copy$/$paste a formula across a row or down a column, an absolute cell reference or a mixed cell reference may be preferred. If a specific Excel function is to be used, the directions will specify the use of that function. Do not type in numerical data into a cell or function. Instead, make a reference to the cell in which the data is found. Make your computations only in the blue cells highlighted below. In all cases, unless otherwise directed, use the earliest appearance of the data in your formulas, usually the Given Data section.

DATA

Sales $$400,000$

Cost of goods sold $112,000$

Operating expenses $130,000$

Increase in retained earnings $58,000$

Common stock outstanding $22,000$ shares

Dividend per share $$1\mathrm{.}60$

Tax rate $21\%$

SOLUTION

a$.$ Assuming the firm$$s earnings are taxed at $21$ percent, construct the firm$$s income statement.

Income Statement:

Net sales $$400,000$

Cost of goods sold $112,000$

Gross profit $$288,000$

Operating expenses $130,000$

Operating income $$158,000$

Interest expense

Income before taxes

Tax $0$

Net income $-$$$176,000$

b$.$ Compute the firm$$s operating profit margin.

Operating profit margin

c$.$ What was the times interest earned?

Times interest earned

$($Q#$4,4-3)$