Formulas . Accounting equation: Assets = Liabilities and Owner's Equity Current ratio: current assets/current liabilities Acid test ratio: (current assets - inventory/current liabilities Return on equity: net income/total shareholder's equity Return on assets: net income/total assets Assets to equity: total assets/shareholder's equity Profit margin: net incomeet sales (or sales if net sales not available) Gross margin: gross profit/sales Operating profit or EBIT (Earnings Before Interest and Taxes): net income plus interest and tax Sources of Cash (Year Over Year) Assets - (decrease) Liabilities + (increase) Owner's Equity + (increase) . Uses of Cash (Year Over Year) Assets + (increase) Liabilities - (decrease) Owner's Equity - (decrease) QUESTION Based on the Income Statement below: Tarelle Company Income Statement Year Ended December 31, 2020 QUESTION Based on the Income Statement below: Tarelle Company Income Statement Year Ended December 31, 2020 Revenue: Fees Earned $187,000 Less Expenses: Wages Rent 127,000 11,000 7,000 Utilities Insurance 5,000 1,200 Depreciation Miscellaneous 1,550 Income Before Taxes 52,750 Less Taxes @35% 18,463 Net Income $34,287 Why can't you calculate the gross margin for the year ended December 31, 2020 for the Tarelle Company? Tarelle Company does not have a gross profit since there is no cost of Goods Sold. Gross margins are only calculated for service businesses. Tarelle Company shows a Net Loss for 2020. The gross margin is a negative number