Question

Below are two years’ income statement records of the HTM Corp (imaginary). According to the given...

Below are two years’ income statement records of the HTM Corp (imaginary). According to the given information, please answer the following questions.

Income Statement

HTM Corp

                                             Dec. 31,  2XX1                2XX2

                  Sales                   $1,200,000          $1,500,000

                  Cost of Sales        $   360,000          $   480,000

                  Gross Profit                $   840,000           $1,020,000

                  Payroll Expenses     $ 300,000           $    360,000

                  Gen. & Admin. Exp. $   144,000           $   180,000

                  Other Expenses        $   120,000           $   180,000

                  EBT                                $   276,000          $   300,000

                  Income Taxes             $   110,400          $   120,000

                  Net Income             $   165,600         $   180,000

1. Determine the ROS of 2XX1. Provide your answer rounded to the first decimal in percentage (as in ##.#%).

2. Determine the ROS of 2XX2. Provide your answer rounded to the first decimal in percentage (as in ##.#%).  

3.  Determine the growth rate of its sales in the 2XX2 from 2XX1.  

4.  Determine the growth rate of its Net Income in the 2XX2 from 2XX1 with two decimal points in percentage.

5. Determine the tax rate of the company in 2XX1. Provide your answer with one decimal point in percentage.  

Homework Answers

Answer #1
1 ROS EBT / Sales 276,000 / 1,200,000 23.0%
2 ROS EBT / Sales 300,000 / 1,500,000 20.0%
3 Growth rate (1,500,000 - 1,200,000) / 1,200,000 25.00%
4 Growth rate (180,000 - 165,600) / 165,600 8.70%
5 Tax Rate Income Taxes / EBT 110,400 / 276,000 40.0%

The answers to 1 and 2 would be as follows if net income is used instead

1 ROS Net Income / Sales 165,600 / 1,200,000 13.8%
2 ROS Net Income / Sales 180,000 / 1,500,000 12.0%
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