(Analyzing profitability) (Related to Checkpoint 4.3 on page 129) In 2016, the Allen Corporation had sales of $65 million, total assets of $42 million, and total liabilities of $20 million. The interest rate on the company's debt is 6 percent, and its tax rate is 35 percent. The operating profit margin is 12 percent. a. Compute the firm's 2016 net operating income and net income. b. Calculate the firm's operating return on assets and return on equity. (Hint: You can assume that interest must be paid on all of the firm's liabilities.) U V 1 Particulars Amount 2 Sales $6,500,000 3 Cost of goods sold $3,575,000 4 Gross profit $2,925,000 5 Operating expenses $1,300,000 6 Net operating income $1,625,000 7 Interest expense $1,100,000 8 Earnings before taxes $525,000 9 Taxes $86,625 10 Net income $438,375 Formulas: U V 1 Particulars 2 Sales 3 Cost of goods sold 4 Gross profit 5 Operating expenses 6 Net operating income 7 Interest expense 8 Earnings before taxes 9 Taxes Amount 6500000 =V2*55% =V2-V3 =V2*20% =V4-V5 1100000 =V6-V7 =V8*16.5% =V8-19 10 Net income