Tab, Inc., Income Statements for Fiscal Years 2003, 2004, and 2005 Amount (in millions of dollars) 2005 2004 2003 Revenues $25,000 20,000 $22,000 18,000 $21,000 17,000 Cost of sales $4,000 Gross profit Selling, general, and administrative expenses $5,000 500 $4,000 800 500 Operating income Interest and other nonoperating expense $4,500 200 $3,500 250 $3,200 250 $2,950 Earnings before income taxes Income tax $4,300 1.410 $3,250 975 885 Net income $2,890 $2,275 $2,065 Tab, Inc., Balance Sheets as of End of Fiscal Years 2003, 2004, and 2005 Amount (in millions of dollars) 2005 2004 2003 $200 Cash, cash equiv., and marketable securities Accounts receivable Inventories $150 1,350 7.500 $100 900 1,800 8.000 7.000 Total current assets Net property, plant, and equipment Intangible assets $10,000 $20,000 1,000 $31,000 $9,000 19,000 1,000 $29,000 $8,000 19,000 1,000 Total assets $28,000 Accounts payable Debt due in one year Long-term debt Shareholders' cquity $500 1,000 12,000 17,500 $790 1,000 13,000 14,210 $615 1,000 14.000 12,385 Total liabilities and equiry $31,000 $29,000 $28,000 Using horizontal common-size analysis of the income statement of Tab for 2005, the cost of sales relative to the benchmark of 2003 is closest to: A. 95%. B. 118%. C. 123%. Suppose a company has earnings before taxes of $20 billion and its income tax is 35% of its earnings before taxes. If the company has an interest expense of $2 billion, its interest coverage ratio is closest to: A. 6.5 times. B. 10.0 times. C. 11.0 times. If a company has a net profit margin of 12% and a tax rate of 40%, the before-tax profit margin is closest to: A. 7.2%. B. 12.4%. C. 20.0%. If a company's operating profit margin is 4% and its total asset turnover is 1.5 times, its operating return on assets is: A. 2.7%. B. 6.0%. C. 7.3%