The Comparative Income Statements for Silverlight Company Are Shown Below $$\text { Silverlight CompanyIncome StatementsFor Years Ended December 31, }$$

question 147

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.
$$\text { Silverlight CompanyIncome StatementsFor Years Ended December 31, }$$
$\begin{array}{|l|r|r|}\hline&2018&2017\\\hline \text { Net sales } & \$ 720,000 & \$ 607,500 \\\hline \text { Cost of goods sold } & 450,000 & 382,700 \\\hline \text { Gross profit } & \$ 270,000 & \$ 224,800 \\\hline \text { Operating expense } & 168,500 & 134,900 \\\hline \text { Income from operations } & \$ 101,500 & \$ 89,900 \\\hline \text { Interest expense } & 22,300 & 11,200 \\\hline \text { Income before taxes } & \$ 79,200 & \$ 78,700 \\\hline \text { Income taxes } & 28,000 & 27,000 \\\hline \text { Net income } & \$ 51,200 & \$ 51,700 \\\hline\end{array}$

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Definitions:

Hold-Off Diaphragm

The parking brake pancake in an air brake spring brake chamber; must be actuated to release the parking brakes.

Slack Adjuster

A device in air brake systems that adjusts the brakes as they wear to maintain proper brake performance.

Slack Adjuster

A component in air brake systems for vehicles, primarily trucks and buses, that automatically adjusts the brakes as they wear to maintain proper brake performance.

Brake Torque

The force applied by the braking system to slow or stop a vehicle, typically measured in Newton meters (Nm) or foot-pounds (ft-lbs).