Share
Explore BrainMass

# Ratios and Income Statement

1. The Sally Corporation's income statement is given below.

Sally Corporation

Sales.......................................\$250,000

Cost of Goods Sold....................... 145,000

Gross Profit.................................105,000

Fixed Charges (other than interest)...... 25,000

Income before interest and taxes...........80,000

Interest.........................................20,000

Income before taxes......................... 60,000

Taxes (35%)................................... 21,000

Income after taxes............................\$39,000

a. What is Sally's Time-Interest-Earned Ratio?

b. What is the Fixed-Charge-Coverage Ratio?

c. What is the Net Profit Margin?

d. What is the Gross Profit Margin?

#### Solution Summary

Based on the scenario, this solution calculates the following using the correct formulas: Sally's Time-Interest-Earned Ratio, the Fixed-Charge-Coverage Ratio, the Net Profit Margin and the Gross Profit Margin.

\$2.19