Based on the income statement given calculate and explain the :profitability ratioa. Gross profit ratio = gross profit/net salesb. Operating margin ratio =operating income/net salesc. Asset Turnover ratio = net sales / total assetsd. Return on equity ratio = net sales/ shareholders equityLeverage ratioa. interest coverage ratio =operating income / interest expensesb. Debt service ratio=operating income/debt service INCOME STAEMENTParticularsAmount ($)Sales200000Cost of Goods Sold-95000Gross Profit105000Utility-20000Advertisement expense-1000Administration expense-2000Earning Before Interest and Tax (EBIT)82000Interest-10,000Earning Before Tax (EBT)72,000Тах-5000Earning After Tax (EAT)67,000Note :- The cost of raw material is already includedin cost of goods sold. So, it has not been mentionedseparetely in the income statement.

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INCOME STAEMENT Particulars Amount ($) Sales 200000 Cost of Goods Sold -95000 Gross Profit 105000 Utility -20000 Advertisement expense -1000 Administration expense -2000 Earning Before Interest and Tax (EBIT) 82000 Interest -10,000 Earning Before Tax (EBT) 72,000 Таx -5000 Earning After Tax (EAT) 67,000 Note :- The cost of raw material is already included in cost of goods sold. So, it has not been mentioned separetely in the income statement.

INCOME STAEMENT Particulars Amount ($) Sales 200000 Cost of Goods Sold -95000 Gross Profit 105000 Utility -20000 Advertisement expense -1000 Administration expense -2000 Earning Before Interest and Tax (EBIT) 82000 Interest -10,000 Earning Before Tax (EBT) 72,000 Таx -5000 Earning After Tax (EAT) 67,000 Note :- The cost of raw material is already included in cost of goods sold. So, it has not been mentioned separetely in the income statement.

Fundamentals of Financial Management (MindTap Course List)

15th Edition

ISBN:9781337395250

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter4: Analysis Of Financial Statements

Section: Chapter Questions

Problem 24P: Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of...

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