(a)
The net profit for the year.
Answer to Problem 25P
The net profit for the year is
Explanation of Solution
Calculation:
Calculate the total revenue.
Substitute
Write the expression to calculate the total expenses.
Substitute
Write the expression to calculate the profit before taxes.
Substitute
Calculate the profit after tax
Conclusion:
Thus, the net profit for the year is
(b)
The income statement.
Answer to Problem 25P
The income statement table is shown below.
Particulars | Amount |
Total Operating Revenue | |
Less: Total Operating Expense | |
Operating Revenue | |
Non-Operating Revenue and Expenses | |
Total Non-Operating Revenue | |
Less: Total Non-Operating Revenue | |
Non-Operating Revenue | |
Net Income Before taxes | |
Less: Income Taxes | |
Net Profit/(Loss) |
Explanation of Solution
Calculation:
Make the Income Statement Table.
Particulars | Amount |
Total Operating Revenue | |
Less: Total Operating Expense | |
Operating Revenue | |
Non-Operating Revenue and Expenses | |
Total Non-Operating Revenue | |
Less: Total Non-Operating Revenue | |
Non-Operating Revenue | |
Net Income Before taxes | |
Less: Income Taxes | |
Net Profit/(Loss) |
Conclusion:
Thus, the Income Statement table is shown below.
Particulars | Amount |
Total Operating Revenue | |
Less: Total Operating Expense | |
Operating Revenue | |
Non-Operating Revenue and Expenses | |
Total Non-Operating Revenue | |
Less: Total Non-Operating Revenue | |
Non-Operating Revenue | |
Net Income Before taxes | |
Less: Income Taxes | |
Net Profit/(Loss) |
(c)
The interest coverage ratio and net profit ratio, whether the interest coverage ratio is acceptable or not.
The interest coverage ratio is
The net profit ratio is
Since, the Interest coverage ratio for an industrial firm should be at least
Hence it is not acceptable.
Calculation:
Write the expression to calculate the Total income.
Substitute
Write the expression to calculate the Interest Coverage Ratio.
Substitute
Since, the Interest coverage ratio for an industrial firm should be at least
Hence it is not acceptable.
Write the expression to calculate the net profit ratio.
Substitute
Conclusion:
The interest coverage ratio is
The net profit Ratio is
Since, the Interest coverage ratio for an industrial firm should be at least
Hence it is not acceptable.
(c)
The interest coverage ratio and net profit ratio, whether the interest coverage ratio is acceptable or not.
Answer to Problem 25P
The interest coverage ratio is
The net profit ratio is
Since, the Interest coverage ratio for an industrial firm should be at least
Hence it is not acceptable.
Explanation of Solution
Calculation:
Write the expression to calculate the Total income.
Substitute
Write the expression to calculate the Interest Coverage Ratio.
Substitute
Since, the Interest coverage ratio for an industrial firm should be at least
Hence it is not acceptable.
Write the expression to calculate the net profit ratio.
Substitute
Conclusion:
The interest coverage ratio is
The net profit Ratio is
Since, the Interest coverage ratio for an industrial firm should be at least
Hence it is not acceptable.
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Chapter 17 Solutions
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