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The condensed income statements for years 20X1 and 20X2 for the Ruhf Inn are shown below: 20X1 20X2 Room revenue Room-labor costs Room-other expenses Room
The condensed income statements for years 20X1 and 20X2 for the Ruhf Inn are shown below: 20X1 20X2 Room revenue Room-labor costs Room-other expenses Room income Undistributed operating expenses Interest expense Rent expense Other fixed charges $2,500,000 400,000 300,000 1,800,000 500,000 200,000 100,000 400,000 600,000 200,000 $3,000,000 500,000 350,000 2,150,000 600,000 250,000 120,000 400,000 Income before taxes Income taxes 780,000 260,000 $ 520,000 Net income $ 400,000 Required: 1. Determine the following for each year: a. Number of times interest earned ratio b. Fixed charge coverage ratio c. Profit margin d. Room labor cost percentage e. Average tax rate 2. Prepare a common-size income statement for 20X1 and 20X2 and com- ment on any significant differences in the percentages
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