In the year just? ended, Callaway Lighting had sales of $5,000,000 and incurred cost of goods sold equal to $ 4,500,000.

The? firm's operating expenses were $ 130,000 and its increase in retained earnings was $ 40,000 for the year. There are currently 100,000 common stock shares outstanding and the firm pays a $ 1.485 dividend per share. The firm has $ 1,000,000 in? interest-bearing debt on which it pays 8.0 percent interest.

a.??Assuming the? firm's earnings are taxed at 35% construct the? firm's income statement.

b.??Calculate the? firm's operating profit margin and net profit margin.

c.??Compute the times interest earned ratio. What does this ratio tell you about? Callaway's ability to pay its interest? expense?

d.??What is the? firm's return on? equity?