Question

(Evaluating profitability​) Last​ year, Stevens Inc. had sales of ​$397,000​, with a cost of goods sold of ​$115,000. The​ firm's operating expenses were $ 125,000​, and its increase in retained earnings was ​$58,000. There are currently 21,500 common stock shares outstanding and the firm pays a ​$1.61 dividend per share. a. Assuming the​ firm's earnings are taxed at 34 ​percent, construct the​ firm's income statement. b. Compute the​ firm's operating profit margin. c. What was the times interest​ earned?

Answer 1

Answer:

(A) Income statemnt for year ended 2XX9

sales                          397,000

COGS                        (115,000)

gross profit                282,000

operating expenses (125,000)

income before taxes 157,000

income tax expense (53,380)  34% of 157,000

Net Income               103,620

(B) Profit Margin 26.10%

(C) non-sufficent information

Explanation:

(A)

the dividends and retained earnings are not part of the income statment.

(B)

profit margin:

net income / sales = 103,620/397,000 = 0.261007556 = 26.10%

(C) non-sufficent information