The Haines Corporation shows the following financial data for 20X1 and 20X2: 20X1 20X2 Sales $ 3,220,000 $ 3,020,000 Cost of goods sold 1,600,000 2,300,000 Gross profit $ 1,620,000 $ 720,000 Selling & administrative expense 278,000 288,000 Operating profit $ 1,342,000 $ 432,000 Interest expense 48,600 52,700 Income before taxes $ 1,293,400 $ 379,300 Taxes (35%) 452,690 132,755 Income after taxes $ 840,710 $ 246,545 For each year, compute the following ratios and indicate how the change in each ratio will affect profitability in 20X2. Note: Input your answers as a percent rounded to 2 decimal places. cost of goods sold to sales selling and administrative expense to sales interest expense to sales 20X1 20X2 Profitability

The Haines Corporation shows the following financial data for 20X1 and 20X2: 20X1 20X2 Sales $ 3,220,000 $ 3,020,000 Cost of goods sold 1,600,000 2,300,000 Gross profit $ 1,620,000 $ 720,000 Selling & administrative expense 278,000 288,000 Operating profit $ 1,342,000 $ 432,000 Interest expense 48,600 52,700 Income before taxes $ 1,293,400 $ 379,300 Taxes (35%) 452,690 132,755 Income after taxes $ 840,710 $ 246,545 For each year, compute the following ratios and indicate how the change in each ratio will affect profitability in 20X2. Note: Input your answers as a percent rounded to 2 decimal places. cost of goods sold to sales selling and administrative expense to sales interest expense to sales 20X1 20X2 Profitability

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The Haines Corporation shows the following financial
data for 20X1 and 20X2: 20X1 20X2 Sales $ 3,220,000 $
3,020,000 Cost of goods sold 1,600,000 2,300,000 Gross
profit $ 1,620,000 $ 720,000 Selling & administrative
expense 278,000 288,000 Operating profit $ 1,342,000 $
432,000 Interest expense 48,600 52,700 Income before
taxes $ 1,293,400 $ 379,300 Taxes (35%) 452,690 132,755
Income after taxes $ 840,710 $ 246,545 For each year,
compute the following ratios and indicate how the
change in each ratio will affect profitability in 20X2.
Note: Input your answers as a percent rounded to 2
decimal places.
cost of goods sold to sales
selling and administrative
expense to sales
interest expense to sales
Expert Answer
20X1 20X2 Profitability

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