Sales Cost of goods sold Gross profit Selling & administrative expense Operating profit Interest expense Income before taxes Taxes (35%) Income after taxes 20x1 $ 2,620,000 2,400,000 $ 220,000 234,000 $ -14,000 45,600 $ -59,600 -20,860 $ -38,740 a. Cost of goods sold to sales b. Selling and administrative expense to sales c. Interest expense to sales 20X1 for each year, compute the following ratios and indicate how the change in each ratio will aff rofitability in 20X2. Note: Input your answers as a percent rounded to 2 decimal places. % 20x2 $ 3,770,000 2,380,000 $ 1,390,000 264,000 % % $ 1,126,000 52,400 $ 1,073,600 375,760 $ 697,840 20X2 % % % Profitability

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The Haines Corporation shows the following financial data for 20X1 and 20X2:
Sales
Cost of goods sold
Gross profit
Selling & administrative expense
Operating profit
Interest expense
Income before taxes
Taxes (35%)
Income after taxes
20X1
$ 2,620,000
2,400,000
$ 220,000
234,000
-14,000
45, 600
$ -59,600
-20,860
$
$ -38,740
a. Cost of goods sold to sales
b. Selling and administrative expense to sales
c. Interest expense to sales
For each year, compute the following ratios and indicate how the change in each ratio will affect
profitability in 20X2.
Note: Input your answers as a percent rounded to 2 decimal places.
20X1
20X2
$ 3,770,000
2,380,000
$ 1,390,000
264,000
$ 1,126,000
52,400
%
%
%
$ 1,073,600
375,760
$ 697,840
20X2
%
%
%
Profitability
Transcribed Image Text:The Haines Corporation shows the following financial data for 20X1 and 20X2: Sales Cost of goods sold Gross profit Selling & administrative expense Operating profit Interest expense Income before taxes Taxes (35%) Income after taxes 20X1 $ 2,620,000 2,400,000 $ 220,000 234,000 -14,000 45, 600 $ -59,600 -20,860 $ $ -38,740 a. Cost of goods sold to sales b. Selling and administrative expense to sales c. Interest expense to sales For each year, compute the following ratios and indicate how the change in each ratio will affect profitability in 20X2. Note: Input your answers as a percent rounded to 2 decimal places. 20X1 20X2 $ 3,770,000 2,380,000 $ 1,390,000 264,000 $ 1,126,000 52,400 % % % $ 1,073,600 375,760 $ 697,840 20X2 % % % Profitability
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