Question

Question 1

Cumulative Problem: XYZ Company has sales of $4,800,000, COGS is 40% of sales, operating expenses are $2,100,000, interest expense $20,000 and depreciation 30,000. Tax rate 40%. Construct their income statement and answer the below:

Gross profit is ___.

	a.	2,400,000
	b.	1,920,000
	c.	730,000
	d.	2,880,000

Question 2

What best describes operating profit margin?

	a.	earnings before interest and tax in relation to sales
	b.	the impact of depreciation on taxes paid
	c.	cost of goods sold in relation to sales
	d.	net profit margin in relation to sales

Question 3

Cumulative Problem: XYZ Company has sales of $4,800,000, COGS is 40% of sales, operating expenses are $2,100,000, interest expense $20,000 and depreciation 30,000. Tax rate 40%. Construct their income statement and answer the below.

EBT is $ ___.

	a.	760,000
	b.	730,000
	c.	400,000
	d.	750,000

Question 4

Cumulative Problem: XYZ Company has sales of $4,800,000, COGS is 40% of sales, operating expenses are $2,100,000, interest expense $20,000 and depreciation 30,000. Tax rate 40%. Construct their income statement and answer the below.

Net profit margin is?

	a.	12%
	b.	9.4%
	c.	9.5%
	d.	9.1%

Question 5

Cumulative Problem: XYZ Company has sales of $4,800,000, COGS is 40% of sales, operating expenses are $2,100,000, interest expense $20,000 and depreciation 30,000. Tax rate 40%. Construct their income statement and answer the below.

If dividend payout is 40%, retained earnings are ____.

	a.	270,000
	b.	273,600
	c.	144,000
	d.	262,800

Answer 1

Question 1

Gross Profit = Sales - COGS

Gross Profit = 4,800,000 - 4,800,000*0.4

Gross Profit = 2,880,000

(Option d)

Question 2

Operating Profit Margin = EBIT/Sales

Option a. earnings before interest and tax in relation to sales

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