(Ratio Analysis): Last year Co. XYZ had sales of $ 400,000, with “cost of goods sold” of $ 112,000. The firm had operating expenses of $ 130,000, and an increase in retained earnings of $ 58,000. There are currently 22,000 common shares issued and the firm pays $ 1.60 dividend per share.
A. Assuming that the firm's profits are taxed at 34%, build an “Income Statement” for the firm.
B. Compute the "Operating Profit Margin" for the signature.
C. What was the “times interest earned?
Dividends Paid = Dividend per share * No. of common shares outstanding
= $1.60 * 22,000 = $35,200
Net Income = Dividends Paid + Increase in retained earnings
= $35,200 + $58,000 = $93,200
EBT = Net Income / (1 - t) = $93,200 / (1 - 0.34) = $93,200 / 0.66 = $141,212.12
Income Statement
Sales $400,000
Less: Cost of goods sold ($112,000)
Less: Operating Costs ($130,000)
EBIT $158,000
Less: Interest ($ 16,787.88)
Earnings before tax $141,212.12
Less: Taxes(@34%) ($ 48,012.12)
Net Income $ 93,200
b). Operating Profit Margin = EBIT / Sales = $158,000 / $400,000 = 0.395, or 39.50%
c). Times Interest Earned = EBIT / Interest Expense = $158,000 / $16,787.88 = 9.41
(Ratio Analysis): Last year Co. XYZ had sales of $ 400,000, with “cost of goods sold”...
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evaluating profitability Last year, Stevens Inc. had sales of $401 comma 000 , with a cost of goods sold of $111 comma 000 . The firm's operating expenses were $ 131 comma 000 , and its increase in retained earnings was $58 comma 000 . There are currently 22 comma 500 common stock shares outstanding and the firm pays a $1.57 dividend per share. a. Assuming the firm's earnings are taxed at 34 percent, construct the firm's income statement. b....
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