Exhibit 5-2 The following is an income statement from the financial records of Peace, Love and Joy Company for the year ended December 31, 2015: Income Statement Sales (net) Cost of Goods Sold Gross Profit Operating expenses Operating Income Interest revenue $ 245,675 (67,500) $ 178,175 (125,000) $ 53,175 5,600 (8,750) $ 50,025 (15,008) $ 35,017 Interest expense Income before taxes Income tax expense Net Income Refer to Exhibit 5-2. Compute operating margin for Peace, Love, and Joy Company. 14.25% 20.36% 19.65% 21.64% Exhibit 5-2 The following is an income statement from the financial records of Peace, Love and Joy Company for the year ended December 31, 2015: Income Statement Sales (net) Cost of Goods Sold Gross Profit Operating expenses Operating Income Interest revenue $ 245,675 (67,500) $ 178,175 (125,000) $ 53,175 5,600 (8,750) $ 50,0251 (15,008) $ 35,017 Interest expense Income before taxes Income tax expense Net Income Refer to Exhibit 5-2. Compute earnings-based interest coverage for Peace, Love, and Joy Company. 6.72 times 5.72 times 16.88 times 6.08 times