Question

The Haines Corporation shows the following financial data for 20X1 and 20X2: Sales 20X1: $3,400,000 20X2: $3,000,000 Cost of goods sold 20X1: 1,880,000 20X2: 2,060,000 Gross profit 20X1: $1,520,000 20X2: $940,000 Selling & administrative expense 20X1: 302,000 20X2: 300,000 Operating profit 20X1: $1,218,000 20X2: $640,000 Interest expense 20X1: 48,000 20X2: 54,400 Income before taxes 20X1: $1,170,000 20X2: $585,600 Taxes (35%) 20X1: 409,500 20X2: 204,960 Income after taxes 20X1: $760,500 20X2: $380,640 For each year, compute the following ratios and indicate how the change in each ratio will affect profitability in 20X2. Note: Input your answers as a percent rounded to 2 decimal places. a. Cost of goods sold to sales b. Selling and administrative expense to sales c. Interest expense to sales

          The Haines Corporation shows the following financial data for 20X1 and 20X2:

Sales 20X1: $3,400,000 20X2: $3,000,000
Cost of goods sold 20X1: 1,880,000 20X2: 2,060,000
Gross profit 20X1: $1,520,000 20X2: $940,000
Selling & administrative expense 20X1: 302,000 20X2: 300,000
Operating profit 20X1: $1,218,000 20X2: $640,000
Interest expense 20X1: 48,000 20X2: 54,400
Income before taxes 20X1: $1,170,000 20X2: $585,600
Taxes (35%) 20X1: 409,500 20X2: 204,960
Income after taxes 20X1: $760,500 20X2: $380,640

For each year, compute the following ratios and indicate how the change in each ratio will affect profitability in 20X2.
Note: Input your answers as a percent rounded to 2 decimal places.

a. Cost of goods sold to sales
b. Selling and administrative expense to sales
c. Interest expense to sales

The Haines Corporation shows the following financial data for 20X1 and 20X2:

Sales 20X1: 3,400,000 20X2:3,000,000
Cost of goods sold 20X1: 1,880,000 20X2: 2,060,000
Gross profit 20X1: 1,520,000 20X2:940,000
Selling administrative expense 20X1: 302,000 20X2: 300,000
Operating profit 20X1: 1,218,000 20X2:640,000
Interest expense 20X1: 48,000 20X2: 54,400
Income before taxes 20X1: 1,170,000 20X2:585,600
Taxes (35%) 20X1: 409,500 20X2: 204,960
Income after taxes 20X1: 760,500 20X2:380,640

For each year, compute the following ratios and indicate how the change in each ratio will affect profitability in 20X2.
Note: Input your answers as a percent rounded to 2 decimal places.

a. Cost of goods sold to sales
b. Selling and administrative expense to sales
c. Interest expense to sales

Added by Esperanza W.

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