Question:
The Haines Corp. shows the following financial data for 2009 and 2010.
|
2009 |
| Sales |
$2,500,000 |
| Cost of goods sold |
$1,500,000 |
| Gross Profit |
1,000,000 |
| Selling & administrative expense |
205,000 |
| Operating profit |
795,000 |
| Interest expense |
40,000 |
| Income before taxes |
$755,000 |
| Taxes (35%) |
264,250 |
| Income after taxes |
490,750 |
For each year, compute the following and indicate whether it is increasing or decreasing profitability in 2010 as indicated by the ratio.
a. Cost of goods sold to sales.
b. Selling and administrative expense to sales.
c. Interest expenses to sales