Preparing an Income Statement CheckPoint

Preparing an Income Statement CheckPoint - The total net...

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Preparing an Income Statement CheckPoint After analyzing Coyote’s income statement, the firm has a good profitable foundation in place, especially with the operating profit of about 17%. Since the company’s profit is coming mostly from their operations, this proves that they have healthy sales levels. Therefore, enabling the company to pay and maintain their expenses. However the cost of goods sold is high, which needs to be reduced. In order to reduce the cost of goods sold management needs to evaluate the costs and come up with a plan to solve the issues. Also, by reducing the cost, the reduction will generate more profit. Since the company gross margin was over 40%, it is consider being a strong margin in this industry.
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Unformatted text preview: The total net profit of $174,000 is a great number because the net profit had a margin of 9%. I believe the company had a great return on assets because the depreciation was only $14,000. The expenses was only 25% of the sales and the general administrative expenses was barely 10%. After analyzing Coyotes income statement, I believe the company is very profitable because the margins was low in majority of the areas on the income statement. However, there are some areas that the company needs to improve in, which is the cost associated with the cost of goods sold and their taxes....
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