Finance Homework 2 - Janine Nipal Professor Mirabile...

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Janine Nipal Professor Mirabile Financial Management 31 January 2012 Chapter 2 2. Gross profit margin= gross profit/ sales Operating profit margin= EBIT/ sales Pre-tax profit margin= earnings before taxes/ sales Net profit margin= earnings after taxes/ sales a. Gross profit margin- .60= x/500,000= 300,000 Operating profit margin- .27= x/500,000= 135,000 Pre-tax profit margin- .14= x/500,000= 70,000 Income Statement: Revenue 500,000 Operating profit 135,000 Earnings before taxes 365,000 Less income tax 127,750 Earnings after taxes 237,250 b. Net profit margin= earnings after taxes/ sales 237,250/500,000= .4745 4. a. Operating profit margin= EBIT/ sales .22= x/2,500,000= 550,000 b. Net profit margin= earnings after taxes/ sales .065= x/ 2,500,000= 162,500 c. return on assets= earnings after taxes/ average total assets .09= 162,500/x= 1805555.6 d. return on equity= earnings after taxes/ average total equity .14= 162,500/x= 1160714.3 6. current ratio= current assets/ current liabilities Quick ratio= quick assets/ current liabilities a. Total current liabilities current ratio 1.85= 125,000/ x= 67.57 b. Quick Assets quick ratio 1.18=x/ 67.57= 79.73 c. Inventory 125,000- 79.73= 124,920.27
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  • Spring '10
  • MARGSIRI
  • Generally Accepted Accounting Principles, average total assets, Assets/ Current Liabilities, profit margin= earnings

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