Metal Inc. has 6,000 shares of common stock outstanding. The company also has the following amounts...
Metal Inc. has 6,000 shares of common stock outstanding. The company also has the following amounts in revenue and expense accounts:
• Sales revenue $90,000
• General and administrative expense $9,500
• Interest expense $3,500
• Depreciation expense $6,000
• Utilities $4,750
• Cost of goods sold $53,000
Calculate:
(a) gross profits.
(b) operating profits.
(c) profits before taxes.
(d) net profits after taxes (assume a 40 percent tax rate).
(e) earnings per share (EPS)
Homework Answers
| Sales revenue | 90000 | |
| (-) Cost of goods sold | 53000 | |
| Gross profit | 37000 | (a) |
| (-) General and administrative expense | 9500 | |
| (-) Depreciation expense | 6000 | |
| (-) Utilities | 4750 | |
| Operating profits | 16750 | (b) |
| (-) Interest expense | 3500 | |
| Profits before taxes | 13250 | (c) |
| (-) Taxes @ 40% | 5300 | |
| Net profits after taxes | 7950 | (d) |
| Earnings per share (EPS) = ( Net profit after taxes - Preferred dividend ) / Shares of common stock outstanding = ( 7950 - 0 ) / 6000 | 1.325 | (e) |
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