The following details are from STU Corp’s accounts:

• Initial Inventory: $50,000
• Total Purchases: $150,000
• Final Inventory: $45,000
• Net Sales: $250,000
• Sales Returns: $15,000
• Sales Discounts: $7,000
• Operating Expenses: $60,000

Requirements:

1. Compute the cost of goods sold.
2. Calculate the gross profit.
3. Prepare the income statement.
4. Determine the operating profit margin.
5. Explain how inventory turnover can affect profitability.