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3-6 (Algo) Profitability ratios [LO3-2] Dr. Zhivgo Diagnostics Corporation's income statement for 20 xx1 is as follows: Sales $2,710,000 Cost of goods sold 1,850,000 Gross
3-6 (Algo) Profitability ratios [LO3-2] Dr. Zhivgo Diagnostics Corporation's income statement for 20 xx1 is as follows: Sales $2,710,000 Cost of goods sold 1,850,000 Gross profit $860,000 Selling and administrative expense 346,000 Operating profit $514,000 Interest expense 58,000 Income before taxes $456,000 Taxes (30%) 136,800 Income after taxes $319,200 a. Compute the profit margin for 20 xx1. Note: Input the profit margin as a percent rounded to 2 decimal places. Answer is complete and correct. Profit margin 11.78 O/ b. Assume that in 20 xx2, 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. Assume a tax rate of 30 percent on income
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