Problem:
The Sally Corporation's income statement is given below.
Sally Corporation
Sales.......................................$250,000
Cost of Goods Sold....................... 145,000
Gross Profit.................................105,000
Fixed Charges (other than interest)...... 25,000
Income before interest and taxes...........80,000
Interest.........................................20,000
Income before taxes......................... 60,000
Taxes (35%)................................... 21,000
Income after taxes............................$39,000
a. What is Sally's Time-Interest-Earned Ratio?
b. What is the Fixed-Charge-Coverage Ratio?
c. What is the Net Profit Margin?
d. What is the Gross Profit Margin?