Mainline Clinic, a for$-$profit business, had revenues of $$11\mathrm{.}3$ million last year. Expenses other than depreciation totaled $63$ percent of revenues, and depreciation expense was $$1\mathrm{.}3$ million. All revenues were collected in cash during the year, and all expenses other than depreciation were paid in cash. Mainline must pay taxes at a rate of $39$ percent of pretax $($operating$)$ income.  

 

Now, suppose the company changed its depreciation calculation procedures $($still within GAAP$)$ such that its depreciation expense was halved. How would this change affect Mainline's profit margin? If profit margin would go down, enter the amount of the change as a negative number. If profit margin would go up$,$ enter the amount of the change as a positive number.

Enter your answer as a percent, rounded to one decimal place. Omit the $"\%"$ sign. For example, if the answer is $12\mathrm{.}34\%,$ enter as $12\mathrm{.}3.$ If the answer is negative, place a minus sign $(-)$ before the answer.

Answer rating: 100% (QA)

To determine how the change in depreciation calculation procedures affects Mainlines profit margin w... View the full answer