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Using the income statement for Time Mirror and Glass Co., Compute the following ratios Time Mirror and Glass Co. Income Statement Sales 126,000 Cost of Goods Sold 93000 Gross Profit 33,000 Selling and Administration Expenses 11,000 Lease Expense 4,000 Operating Profit 18,000 Interest Expense 3000 Earnings before Taxes 16,000 Taxes (30%) 4500 Earnings after Taxes 10,500 1. Interest Coverage 2. Fixed Charge Coverage Ratio 3The total assets for the Company equals $80,000. Set up the DuPont ratio analysis 3. Compute the profit margin 4. Compute the ratio on assets(investment)

Sagot :

Parrain

The required ratios for Time Mirror and Glass Co., given the income statement, are:

  1. Interest Coverage = 6 times
  2. Fixed charge coverage ratio = 3. 14 times
  3. Profit margin = 8. 33 %
  4. Return on Assets = 13. 13 %

How to find the return on investment ?

The interest coverage ratio can be found by the formula :

= Income before interest and taxes or Operating Profit / Interest

= 18, 000 / 3, 000

= 6. 00 times

The Fixed charge coverage ratio for Time Mirror and Glass Co is :

= ( Operating income + Fixed expenses ) / ( Interest + Fixed expenses )

= ( 18, 000 + 4, 000 ) / ( 3, 000 + 4, 000

= 3. 14 times

Profit margin :

= Net income / Sales

= 10, 500 / 126, 000

= 8. 33 %

The Return on investment :

= (Net income / Sales) x (Sales / Total assets)

= ( 10, 500 / 126, 000 ) x ( 126, 000 / 80, 000 )

= 13. 13 %

Find out more on return on investment at https://brainly.com/question/12961344

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