Microsoft Corporation's annual report shows the following information:

• Total Sales: $200,000,000
• Cost of Goods Sold: $120,000,000
• Administrative Expenses: $40,000,000
• Selling Expenses: $30,000,000
• Interest Expense: $5,000,000
• Tax Rate: 21%

Requirements:

1. Prepare an Income Statement.
2. Calculate the Gross Profit Margin.
3. Determine the Net Profit Margin.
4. Analyze the impact of a 10% reduction in administrative expenses on net income.
5. Discuss the importance of expense management for profitability.