Information from a Manufacturing Company's Current Year Income Statement Follows

question 122

Essay

Information from a manufacturing company's current year income statement follows.Calculate the company's (a)profit margin ratio,(b)gross margin ratio,and (c)times interest earned.
$$\begin{array} { l r } \text { Sales } & \$ 850,000 \\\text { Cost of goods sold } & 455,000 \\\text { Gross profit } & \$ 395,000 \\\text { Operating expenses } & 260,000 \\\text { Operating income } & \$ 135,000 \\\text { Interest expense } & \underline { 32,000} \\\text { Income before taxes } & \$ 103,000 \\\text { Income taxes expense } & 12,400 \\\text { Net income } & \underline { \$ 90,600}\end{array}$$

---

Definitions:

Magnetic Fields

Invisible fields produced by electrically charged objects affecting the behavior of other charged or magnetic objects in the vicinity.

Electrolyte

A substance, such as the sulfuric acid and water mix used in a battery, that contains free ions that make the substance electrically conductive.

Sulfuric Acid

A highly corrosive strong mineral acid with molecular formula H₂SO₄, used in various applications including battery acid.

Lead Acid Battery

A type of rechargeable battery that uses plates of lead and an acid electrolyte to generate electricity, commonly used in vehicles.