Given the selected comparative financial statements of FoodMart Inc. for the years ended December 31, 2023, 2022,
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Question:
Given the selected comparative financial statements of FoodMart Inc. for the years ended December 31, 2023, 2022, and 2021, answer the following questions:
FoodMart Inc. Comparative Income Statements for Years Ended December 31, 2023, 2022, and 2021:
- Sales: 2023: $1,200,000, 2022: $1,000,000, 2021: $800,000
- Cost of Goods Sold: 2023: $700,000, 2022: $600,000, 2021: $500,000
- Gross Profit: 2023: $500,000, 2022: $400,000, 2021: $300,000
- Operating Expenses: 2023: $150,000, 2022: $120,000, 2021: $100,000
- Interest Expense: 2023: $20,000, 2022: $15,000, 2021: $10,000
- Income Tax Expense: 2023: $50,000, 2022: $40,000, 2021: $30,000
- Net Income: 2023: $280,000, 2022: $225,000, 2021: $160,000
FoodMart Inc. Comparative Balance Sheets as of December 31, 2023, 2022, and 2021:
- Current Assets: 2023: $400,000, 2022: $350,000, 2021: $300,000
- Long-term Assets: 2023: $800,000, 2022: $650,000, 2021: $500,000
- Total Assets: 2023: $1,200,000, 2022: $1,000,000, 2021: $800,000
- Current Liabilities: 2023: $250,000, 2022: $200,000, 2021: $150,000
- Long-term Liabilities: 2023: $350,000, 2022: $300,000, 2021: $250,000
- Shareholders' Equity: 2023: $600,000, 2022: $500,000, 2021: $400,000
Requirements:
- Calculate the gross profit margin for each year.
- Compute the operating profit margin for each year.
- Determine the debt-to-equity ratio for each year.
- Calculate the interest coverage ratio for each year.
- Discuss the changes in financial leverage over the three years.
Related Book For
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
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