1.Local Co. has sales of $ 10.1 million and cost of sales of $ 6.4

million. Its selling, general and administrative expenses are$ 470, 000 and its research and development is $ 1.5 million. It has annual depreciation charges of $ 1.5 million and a tax rate of

35 %.

a. What is Local's gross margin?

b. What is Local's operating margin?

c. What is Local's net profit margin?

2. Chutes & Co. has interest expense of $ 1.59 million and an operating margin o 11.3 % on total sales of $ 29.6 million. What is Chutes' interest coverage ratio?