Earnings and Expenses (Year Ending January 2012) Sales $65,000,000 Cost of Goods Sold (COGS) $60,000,000 Pretax Earnings $7,475,000 Selected Balance Sheet Items Merchandise Inventory $3,737,500 Total Assets $7,000,000

Dulaney's Stores has posted the following yearly earnings and expenses.

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a. Dulaney's current profit margin is

nothing %.

(Enter your response rounded to one decimal place.)

Dulaney's current yearly ROA is

nothing %.

(Enter your response rounded to one decimal place.)

b. Suppose COGS and merchandise inventory were each cut by

55%.

The new pretax profit margin is

nothing %.

(Enter your response rounded to one decimal place.)

The new ROA is

nothing %.

(Enter your response rounded to one decimal place.)

c. Based on the current profit margin in part a., Dulaney would have to generate

$nothing

in additional sales in order to have the same effect on pretax earnings as a

55%

decrease in merchandise costs. (Enter your response rounded to the nearest dollar.)