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Adequate resources to pay the interest due to creditors

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Reference no: EM131411843

Jose, a financial expert of Cerione Ltd., analyzes the data given below. What conclusion is he likely to arrive at?

Sales

$161,000

Cost of goods sold

110,000

Gross margin

$ 51,000

Total selling and administrative expenses

39,500

Net operating income

$ 11,500

Interest expenses

2,170

Net income before taxes

$ 9,330

Income tax (30%)

2,799

Net income

$ 6,531
  • The company does not have adequate resources to pay the interest due to creditors.
  • The company's earnings before interest is the same as its earnings after taxes.
  • The company has sufficient resources to pay the interest due to creditors.
  • The company's gross margin is 20 percent

Reference no: EM131411843

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