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Profit Margin & Income Calculation

ABC Company Income Statement for 1998

1. Sales.........................................................3,000,000

2. Cost of Goods Sold....................................2,100,000

3. Gross Profits..............................................900,000

4. Selling and admin expense......................450,000

5. Depreciation expense................................

6. Operating profit (EBIT)...............................450,000

7. Interest expense...........................................75,000

8. Earnings before taxes (EBT).................................375,000

9. Taxes.........30%.........................................................112,500

10. Earnings after taxes (EAT)........................................262,500

What is the method for computing the profit margin for 1998?

If sales in 1999 increase by 10% and cost of goods sol increases by 25%, would this company be able to keep all expenses the same? How would I find the profit margin and income for the next year?

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Solution Summary

The solution computes profit margin & income with the given information.

$2.19