Need help to answer this problem. The following information pertains to Greenwic

Question

Need help to answer this problem.

The following information pertains to Greenwich Company. Assume that all balance
sheet amounts represent both average and ending balance figures. Assume that all sales were
on credit.
Balance Sheet
Assets
Cash and short-term investments
P40,000
Accounts receivable, net
25,000
Inventory
20,000
Property, plant, and equipment
210,000
Total Assets
P295,000
Liabilities and Stockholders’ Equity
Current Liabilities
P60,000
Long-term liabilities
85,000
Stockholders' equity -- common
150,000
Total Liabilities and Stockholders' Equity
P295,000
Income Statement
Sales
P85,000
Cost of goods sold
45,000
Gross profit
P40,000
Operating expenses
20,000
Net income
P20,000
Number of shares of common stock
6,000
Market price of common stock
P20
Dividends per share
P0.90
Requirements:
1. What is the gross profit ratio?

Explanation / Answer

Gross profit ratio = Gross profit / Sales

= $40,000 / $85,000

= 0.4706 or 47.06% (rounded to 2 decimal places)

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