The financial statements of Eastern Platinum Limited (Eastplats) are presented in Appendix A at the end of this book.

Instructions

(a) Is Eastplats a service company, merchandising company, or manufacturing company? Explain. (b) Does Eastplats classify its operating expenses on its income statement by nature or by function? Explain.

(c) Are any non-operating revenues and gains or expenses and losses included in Eastplats's income statement? If so, identify the accounts included.

(d) Using "mine operating earnings" as the equivalent of gross profit, calculate Eastplats's gross profit margin for 2010 and 2009.

(e) Calculate Eastplats's profit margin for 2010 and 2009.

(f) Comment on the trend in Eastplats's gross profit margin and profit margin.