Question

shares in Millions, $ in Millions	2018	2017	2016
Income Statement
Net Sales	$108,203	$100,904	$94,595
Cost of sales	71,043	66,548	62,282
Gross profit	37,160	34,356	32,313
Operating expenses:
Selling, general and administrative	19,513	17,864	17,132
Depreciation and amortization	1,870	1,811	1,754
Impairment loss	247	0	0
Total operating expenses	21,630	19,675	18,886
Operating income	15,530	14,681	13,427
Interest and other (income) expense:
Interest and investment income	-93	-74	-36
Interest expense	1,051	1,057	972
Other	16	0	0
Interest and other, net	974	983	936
Earnings before provision for income taxes	14,556	13,698	12,491
Provision for income taxes	3,435	5,068	4,534
Net earnings	$11,121	$8,630	$7,957
Additional Information
Basic weighted average common shares	1,137	1,178	1,229
Cash dividend per share	4.12	3.56	2.76
Operating cash flow for the year	13,038	12,031	9,783

Profitability ratios

• Gross Profit margin
• Profit margin

Solvency

• Times interest earned

Answer 1

1. Gross profit margin= Gross profit/ net sales*100

For 2018:

=> 37,160/108,203*100

=> 34.34%

For 2017:

=> 34,356/100,904*100

=> 34.04%

For 2016:

=> 32,313/94,595*100

=> 34.15%

2. Net profit= Net income/ Sales*100

For 2018:

=> 11,121/108,203*100

=> 10.27%

For 2017:

=> 8,630/100,904*100

=> 8.55%

For 2016:

=> 7,957/94,595*100

=> 8.41%

3. Times interest Earned= EBIT/interest expense

For 2018:

=> 15,530/974

=> 15.94 times

For 2017:

=> 14,681/1,057

=> 13.88 Times

For 2016:

=> 13,427/936

=> 14.34 times