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What is income after taxes and the profit margin

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Reference no: EM132759330

Question - Dr. Zhivàgo Diagnostics Corp. income statements for 20X1 are as follows:

Sales $2,790,000

Cost of goods sold 1,790,000

Gross profit 1,000,000

Selling and administrative expense 302,000

Operating profit 698,000

Interest expense 54,800

Income before taxes 643,200

Taxes (30%) 192,960

Income after taxes $450,240

Required -

a. Compute the profit margin for 20X1.

b. Assume that in 20X2, sales increase by 5 percent and cost of goods sold increases by 10 percent. The firm is able to keep all other expenses the same. Assume a tax rate of 30 percent on income before taxes. What is income after taxes and the profit margin for 20X2?

Reference no: EM132759330

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