Solution-Calculate the operating profit margin ratio

Calculate the operating profit margin ratio

Assignment Help Accounting Basics

Reference no: EM132951120

Question - Rare Metals Inc. sells a rare metal found only in underdeveloped countries overseas. As a result of unstable governments in these countries and the rarity of the metal, the price fluctuates significantly. Financial information is given assuming the use of the first in, first-out (FIFO) method of inventory valuation and also the last-in, first-out (LIFO) method of inventory valuation. Current assets other than inventory total $1,230 and current liabilities total $1,600. The ending inventory balances are $1,350 for FIFO and $525 for LIFO.

Income Statements (in Thousands)
	FIFO	LIFO
Net sales	3,000	3,000
Cost of goods sold	1,400	2,225
Gross profit	1,600	775
Selling, general and administrative	600	600
Operating profit	1,000	175
Interest expense	80	80
Earnings before taxes	920	95
Provision for income taxes	322	33
Net earnings	598	62

Required -

(a) Calculate the following ratios assuming Rare Metals Inc. uses the FIFO method of inventory valuation: gross profit margin, operating profit margin, net profit margin, current ratio, tax rate, and quick ratio.

(b) Calculate the ratios listed in (a) assuming Rare Metals Inc. uses the LIFO method of inventory valuation.

Reference no: EM132951120

Questions Cloud

What dollar sales level would yellow have : Variable costs are $4 per unit and fixed costs total $120,000 at a volume level of 10,000 units. What dollar sales level would Yellow have

How many units would the company have to sell to attain : Thomas Ltd. sold 4,000 units during the year. How many units would the company have to sell to attain target operating income of $250,000?

Explain systems engineering organization : Identify two organizations: one that you think is effective in carrying out their mission, and one that is less than fully effective.

Real-world example of a social movement : Research some real-world examples of social movements that have been started through social media (an example would be the KONY 2012 campaign).

Calculate the operating profit margin ratio : Calculate the following ratios assuming Rare Metals Inc. uses the FIFO method of inventory valuation: gross profit margin, operating profit margin, net profit

Discuss food-beverage and labour budgets and models : Discuss food, beverage and Labour budgets and models that apply to food and beverage operations.

Prepare and interpret a cash budget for the months of? june : The firm makes 17% of sales for? cash, 60% are collected in the next? month, Prepare and interpret a cash budget for the months of? May, June, and July.

Is the president correct in saying that matters which way : From the point of view of the reported operating income for the year, is the president correct in saying that it matters which way salary cost is classified

Summarize the ethical dilemma case : A. In about four sentences summarize the ethical dilemma case presented at the end of chapter 6

User Account

All Pages

Calculate the operating profit margin ratio

Reference no: EM132951120

Reference no: EM132951120

Questions Cloud

Reviews

Write a Review

Accounting Basics Questions & Answers

How much control does fed have over this longer real rate

Coures:- fundamental accounting principles

Accounting problems

Theory of interest - term structure of interest rates

Write a report on internal controls

Prepare the bank reconciliation for company

Cost-benefit analysis

Theory of interest

Liquidity and profitability

What is the expected risk premium on the portfolio

Simple interest and compound interest

Capm and venture capital

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT