Problem 3-6 (Algo) Profitability ratios [LO3-2] Dr. Zhivago Diagnostics Corporation's income statement for 20X1 is as follows: $ 2,790,000 1,650,000 $ 1,140,000 356,000 $ 784,000 58,200 Sales Cost of goods sold Gross profit Selling and administrative expense Operating profit Interest expense Income before taxes Taxes (30%) Income after taxes a. Compute the profit margin for 20X1. Note: Input the profit margin as a percent rounded to 2 decimal places. Profit margin % Income after taxes Profit margin b. Assume that in 20X2, sales increase by 10 percent and cost of goods sold increases by 20 percent. The firm is able to keep all other expenses the same. Assume a tax rate of 30 percent on income before taxes. What is income after taxes and the profit margin for 20X2? Note: Input the profit margin as a percent rounded to 2 decimal places. $ 725,800 217,740 $ 508,060 20X2 % BEN

Problem 3-6 (Algo) Profitability ratios [LO3-2] De. Zhivgo Diagnostics Corporation's income statement for 20X1 is as follows: a. Compute the profit margin for 201. Note: Input the profit margin as a percent rounded to 2 decimal places. b. Assume that in 202, sales increase by 10 percent and cost of goods sold increases by 20 percent The firm is able to keep all other expenses the same. Assume a tax rate of 30 percent on income before taxes. What is income after taxes and the profit margin for 20X2? Note: Input the profit margin as a percent rounded to 2 decimal places