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    Operating Profit Margin

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    Income Statement
    Granny's Cat Farms, Inc.
    Year Ending December 31, 200X
    Revenue

    Gross Sales 100000
    Returns 5000
    Net Sales 95000

    Cost of Goods Sold 40000

    Gross Margin 55000

    Selling General and Administrative Expenses 15000
    Depreciation 1500
    Rent and Utilities 12000
    Indirect Labor 5700

    Total expenses 34200

    Earnings Before Interest and Taxes 20800

    Interest Expenses 5000

    Earnings Before Taxes 29200

    Taxes (30%) 8760

    Net Income 20440

    Balance Sheet
    Granny's Cat Farms
    As of December 31, 200X
    End of 200X Beginning of 200X
    Assets

    Cash 50000 47500
    Marketable Securities 25000 10000
    Inventories (Cat Food, supplies, etc...) 12000 10000
    Other Current Assets 15000 12000
    Total Current Assets 102000 79500

    Net Property, Plant and Equipment 125000 120000
    Other Long Term Assets 15000 15000

    Total Assets 242000 214500

    Liabilities and Shareholders Equity

    Accounts Payable 15000 12000
    Short Term Debt 50000 45000
    Other Current Liabilities 12000 11000
    Total Current Liabilities 77000 68000
    Long Term Debt (including leases) 65000 63000
    Other Long-term Liabilities 20000 18000
    Shareholders Equity 80000 65500

    Given these statements, compute the following 12 ratios for 200X:

    a. Long Term Debt Ratio
    b. Total Debt Ratio
    c. Times Interest Earned
    d. Cash Coverage Ratio
    e. Current Ratio
    f. Quick Ratio
    g. Operating Profit Margin
    h. Inventory Turns
    I. Days in Inventory
    j. Average Collection Period
    k. Return on Equity
    l. Return on Assets

    Please assist and show work so this can be a learning experience for me. Thanks!
    (See attached file for full problem description)

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    Solution Preview

    Income Statement
    Granny's Cat Farms, Inc.
    Year Ending December 31, 200X
    Revenue

    Gross Sales 100000
    Returns 5000
    Net Sales 95000

    Cost of Goods Sold 40000

    Gross Margin 55000

    Selling General and Administrative Expenses 15000
    Depreciation 1500
    Rent and Utilities 12000
    Indirect Labor 5700

    Total expenses 34200

    Earnings Before Interest and ...

    Solution Summary

    This provides the steps to calculate the Operating Profit Margin and other ratios

    $2.49

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