(Related to Checkpoint 4.3) (Profitability analysis) Last year the P. M. Postem Corporation had sales of $434,000, with a cost of goods sold of $113,000. The firm's operating expenses were $126,000, and its increase in retained earnings was $92,100. There are currently 21,000 shares of common stock outstanding, the firm pays a $1.65 dividend per share, and the firm has no interest-bearing debt. a. Assuming the firm's earnings are taxed at 35 percent, construct the firm's income statement. b. Compute the firm's operating profit margin.

(Related to Checkpoint 4.3) (Profitability analysis) Last year the P. M. Postem Corporation had sales of $434,000, with a cost of goods sold of $113,000. The firm's operating expenses were $126,000, and its increase in retained earnings was $92,100. There are currently 21,000 shares of common stock outstanding, the firm pays a $1.65 dividend per share, and the firm has no interest-bearing debt. a. Assuming the firm's earnings are taxed at 35 percent, construct the firm's income statement. b. Compute the firm's operating profit margin.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

(Related to Checkpoint 4.3) (Profitability analysis) Last year the P. M. Postem Corporation had sales of $434,000, with a cost of goods sold of $113,000. The firm's operating
expenses were $126,000, and its increase in retained earnings was $92,100. There are currently 21,000 shares of common stock outstanding, the firm pays a $1.65 dividend
per share, and the firm has no interest-bearing debt.
a. Assuming the firm's earnings are taxed at 35 percent, construct the firm's income statement.
b. Compute the firm's operating profit margin.
Complete the income statement below: (Kouna to the nearest dollar.)
Income Statement
Revenues
Cost of Goods Sold
Gross Profit
Operating Expenses
Net Operating Income
Interest Expense
Earnings before Taxes
Income Taxes
Net Income
$
$
$
$
$
CE

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