What are the income after taxes and profit margin

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Question - Dr. Gupta Diagnostics' income statement for 20XX is as follows:

Sales $2,530,000

Cost of goods sold 1,610,000

Gross profit 920,000

Selling and administrative expense 308,000

Operating profit 612,000

Interest expense 57,600

Income before taxes 554,400

Taxes (30%) 166,320

Income after taxes $388,080

Required -

a. Compute the profit margin in 20XX.

b. Assume in 20XY sales increase by 10 percent and cost of goods sold increases by 20 percent. The firm is able to keep all other expenses the same. Once again, assume a tax rate of 30 percent. What are the income after taxes and profit margin in 20XY?

Reference no: EM132645380

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