The Comparative Income Statements for Silverlight Company Are Shown Below

question 10

Essay

The comparative income statements for Silverlight Company are shown below. Calculate the following ratios for 2018:
(a) profit margin
(b) gross margin
(c) times interest earned.
$\begin{array}{|c|}\hline \text { Silverlight Company}\\\text {Income Statements}\\\text {For Years Ended December 31,}\\\hline\\\begin{array}{l|r|r}\hline & {2018} & 2017 \\\hline \text { Net sales } & \$ 720,000 & \$ 607,500 \\\hline \text { Cost of goods sold } & 450,000 & 382,700 \\\hline \text { Gross profit } & \$ 270,000 & \$ 224,800 \\\hline \text { Operating expense } & 168,500 & 134,900 \\\hline \text { Income from operations } & \$ 101,500 & \$ 89,900 \\\hline \text { Interest expense } & 22,300 & 11,200 \\\hline \text { Income before taxes } & \$ 79,200 & \$ 78,700 \\\hline \text { Income taxes } & 28,000 & 27,000 \\\hline \text { Net income } & \$ 51,200 & \$ 51,700 \\\hline\end{array}\end{array}$

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Definitions:

Engine

A machine designed to convert one form of energy into mechanical energy, often found in vehicles and other machinery.

Oil Filter

A component in vehicles and machinery that removes impurities and contaminants from oil to protect and improve engine performance.

Symbolic Form

A representation of statements or propositions using symbols and variables to denote specific operations, entities, or relationships.

Less Than

A mathematical expression indicating that one quantity is smaller than another.