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Chapter 2, Problem 2.8E

Income Statement Ratio

The income statement of Holly Enterprises shows operating revenues of $134,800, selling expenses of $38,310, general and administrative expenses of $36,990, interest expense of $580, and income tax expense of $13,920. Holly’s stockholders’ equity was $280,000 at the beginning of the year and $320,000 at the end of the year. The company has 20,000 shares of stock outstanding at the end of the year.

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Compute Holly’s profit margin. What other information would you need in order to comment on whether this ratio is favorable?

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Chapter 2 Solutions

Bundle: Financial Accounting: The Impact on Decision Makers, Loose-Leaf Version, 10th Edition + LMS Integrated for CengageNOWv2â„¢, 1 term Printed Access Card

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How To Analyze an Income Statement; Author: Daniel Pronk;https://www.youtube.com/watch?v=uVHGgSXtQmE;License: Standard Youtube License