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(Evaluating profitability​) Last​ year, Stevens Inc. had sales of ​$403,000​, with a cost of goods sold...

(Evaluating profitability​) Last​ year, Stevens Inc. had sales of ​$403,000​, with a cost of goods sold of ​$110,000. The firm's operating expenses were $ 135,000​, and its increase in retained earnings was ​$56,000. There are currently 22,800 common stock shares outstanding and the firm pays a ​$1.62 dividend per share.

a. Assuming the​ firm's earnings are taxed at 34 ​percent, construct the​ firm's income statement.

b. Compute the​ firm's operating profit margin.

c. What was the times interest​ earned?

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Answer #1

Answer of Part b:

Operating Profit Margin = Operating profit / Sales
Operating profit Margin = $158,000 / $403,000
Operating Margin = 0.39

Answer of Part c:

Times Interest Earned = EBIT / Interest
Times Interest Earned = $158,000 / $73,151.52
Times Interest Earned = 2.16

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