Dr. Zhivago Diagnostics Corporation's income statement for 20X1 is as follows: Sales Cost of goods sold Gross profit Selling and administrative expense Operating profit Interest expense Income before taxes Taxes (30%) Income after taxes a. Compute the profit margin for 20X1. $ 2,550,000 1,740,000 $810,000 357,000 $ 453,000 59,900 $ 393,100 117,930 $ 275,170 Note: Input the profit margin as a percent rounded to 2 decimal places. Profit margin 10.79% b. Assume that in 20X2, sales increase by 10 percent and cost of goods sold increases by 20 percent. The firm is able to keep all other expenses the same. Assume a tax rate of 30 percent on income before taxes. What is income after taxes and the profit margin for 20X2? Note: Input the profit margin as a percent rounded to 2 decimal places. Income after taxes Profit margin 20X2 %
Dr. Zhivago Diagnostics Corporation's income statement for 20X1 is as follows: Sales Cost of goods sold Gross profit Selling and administrative expense Operating profit Interest expense Income before taxes Taxes (30%) Income after taxes a. Compute the profit margin for 20X1. $ 2,550,000 1,740,000 $810,000 357,000 $ 453,000 59,900 $ 393,100 117,930 $ 275,170 Note: Input the profit margin as a percent rounded to 2 decimal places. Profit margin 10.79% b. Assume that in 20X2, sales increase by 10 percent and cost of goods sold increases by 20 percent. The firm is able to keep all other expenses the same. Assume a tax rate of 30 percent on income before taxes. What is income after taxes and the profit margin for 20X2? Note: Input the profit margin as a percent rounded to 2 decimal places. Income after taxes Profit margin 20X2 %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sales
Cost of goods sold
Gross profit
Dr. Zhivago Diagnostics Corporation's income statement for 20X1 is as follows:
$ 2,550,000
1,740,000
$810,000
357,000
$ 453,000
59,900
$ 393,100
117,930
$ 275,170
Selling and administrative expense
Operating profit
Interest expense
Income before taxes
Taxes (30%)
Income after taxes
a. Compute the profit margin for 20X1.
Note: Input the profit margin as a percent rounded to 2 decimal places.
Profit margin
10.79%
b. Assume that in 20X2, sales increase by 10 percent and cost of goods sold increases by 20 percent. The firm is able to keep all
other expenses the same. Assume a tax rate of 30 percent on income before taxes. What is income after taxes and the profit margin
for 20X2?
Note: Input the profit margin as a percent rounded to 2 decimal places.
Income after taxes
Profit margin
20X2
%
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