Problem: ABC Company Income Statement for 1998
1. Sales.........................................................3,000,000
2. Cost of Goods Sold.................................... 2,100,000
3. Gross Profits.............................................. 900,000
4. Selling and admin expense...................... 450,000
5. Depreciation expense................................
6. Operating profit (EBIT).............................. 450,000
7. Interest expense........................................... 75,000
8. Earnings before taxes (EBT)............................375,000
9. Taxes.........30%............................................ 112,500
10. Earnings after taxes (EAT)............................. 262,500
What is the method for computing the profit margin for 1998?
If sales in 1999 increase by 10% and cost of goods sol increases by 25%, would this company be able to keep all expenses the same? How would I find the profit margin and income for the next year?