Question

Amounts are in thousands of dollars (except number of shares and price per share):

Kiwi Fruit Company Balance Sheet
Cash and equivalents	$620
Operating assets	800
Property, plant, and equipment	3,200
Other assets	185
Total assets	$4,805
Current liabilities	$1,040
Long-term debt	1,635
Other liabilities	195
Total liabilities	$2,870
Paid in capital	$415
Retained earnings	1,520
Total equity	$1,935
Total liabilities and equity	$4,805

Kiwi Fruit Company Income Statement
Net sales	$8,100
Cost of goods sold	−6,700
Gross profit	$1,400
Operating expense	−400
Operating income	$1,000
Other income	180
Net interest expense	−200
Pretax income	$980
Income tax	−270
Net income	$710
Earnings per share	$2.00
Shares outstanding	355,000
Recent price	$33.00

Kiwi Fruit Company Cash Flow Statement
Net income	$710
Depreciation and amortization	212
Increase in operating assets	−120
Decrease in current liabilities	−128
Operating cash flow	$674
Net (purchase) sale of property	$220
Increase in other assets	−77
Investing cash flow	$143
Net (redemption) issuance of LTD	−$203
Dividends paid	−190
Financing cash flow	−$393
Net cash increase	424

Calculate the gross and operating margins for Kiwi Fruit. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

Answer 1

Calculating the gross and operating margins for Kiwi Fruit:-

- Gross Profit Magin = (Gross Profit/Net sales)*100

Gross Profit Magin = ($1400/$8100)*100

Gross Profit Magin = 17.28%

- Operating Profit Magin = (Operating Profit/Net sales)*100

Operating Profit Magin = ($1000/$8100)*100

Operating Profit Magin = 12.35%

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