QUESTION: Financial information is presented below: Operating expenses $54,000 Sales returns and allowances 6,000 Sales discounts 8,000 Sales revenue 178,000 Cost of goods sold 92,000 Gross Profit would be: a. $92,000. b. $80,000. c. $86,000. d. $72,000.

QUESTION: Financial information is presented below: Operating expenses $54,000 Sales returns and allowances 6,000 Sales discounts 8,000 Sales revenue 178,000 Cost of goods sold 92,000 Gross Profit would be: a. $92,000. b. $80,000. c. $86,000. d. $72,000.

Fundamentals of Financial Management (MindTap Course List)

15th Edition

ISBN:9781337395250

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter4: Analysis Of Financial Statements

Section: Chapter Questions

Problem 24P: Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of...

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Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of goods sold 660.0 Gross profit 135.0 Selling expenses 73.5 EBITDA 61.5 Depreciation expenses 12.0 Earnings before interest and taxes (EBIT) 49.5 Interest expenses 4.5 Earnings before taxes (EBT) 45.0 Taxes (40%) 18.0 Net income 27.0 a. Calculate the ratios you think would be useful in this analysis. b. Construct a DuPont equation, and compare the companys ratios to the industry average ratios. c. Do the balance-sheet accounts or the income statement figures seem to be primarily responsible for the low profits? d. Which specific accounts seem to be most out of line relative to other firms in the industry? e. If the firm had a pronounced seasonal sales pattern or if it grew rapidly during the year, how might that affect the validity of your ratio analysis? How might you correct for such potential problems?
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