Dr. Zhivago Diagnostics Corporation's income statement for 20X1 is as follows: $ 2,800,000 1,780,000 $ 1,020,000 Sales Cost of goods sold Gross profit Selling and administrative expense Operating profit Interest expense Income before taxes Taxes (30%) Income after taxes 315,000 $ 705,000 51,700 $ 653,300 195,990 $ 457,310

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A. Compute the profit margin for 20X1.

B. 

Dr. Zhivago Diagnostics Corporation's income statement for 20X1 is as follows:
$ 2,800,000
1,780,000
$ 1,020,000
Sales
Cost of goods sold
Gross profit
Selling and administrative expense
Operating profit
Interest expense
Income before taxes
Taxes (30%)
Income after taxes
315,000
$ 705,000
51,700
$ 653,300
195,990
$ 457,310
Transcribed Image Text:Dr. Zhivago Diagnostics Corporation's income statement for 20X1 is as follows: $ 2,800,000 1,780,000 $ 1,020,000 Sales Cost of goods sold Gross profit Selling and administrative expense Operating profit Interest expense Income before taxes Taxes (30%) Income after taxes 315,000 $ 705,000 51,700 $ 653,300 195,990 $ 457,310
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Assume that in 20X2, sales increase by 10 percent and cost of goods sold increases by 20 percent. The firm is able to keep all other expenses the same. Assume a tax rate of 30 percent on income before taxes. What is income after taxes and the profit margin for 20X2? 

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