Question

Your firm has the following income statement​ items: sales of​ $52,000,000; income tax of​ $1,880,000; operating expenses of​ $9,000,000; cost of goods sold of​ $36,000,000; and interest expense of​ $800,000. Compute the​ firm's gross profit margin.

Answer 1

Answer:

30.77%

Explanation:

The computation of the gross profit margin is shown below:

Gross profit margin = (Gross profit ÷ Sales) × 100

where,

Gross profit would be

= Sales - costs of goods sold

= $52,000,000 - $36,000,000

= $16,000,000

And, the sales is $52,000,000

Now add these values to the formula above

So, the ratio would be equal to

= ($16,000,000 ÷ $52,000,000) × 100

= 30.77%