Use the following selected data from Success Systems\' income statement for the

Question

Use the following selected data from Success Systems' income statement for the three months ended March 31, 2014. and from its March 31.2014. balance sheet to complete the requirements below: computer services revenue, $26,995; net sales (of goods). $21,894; total sales and revenue, $48,889; cost of goods sold. $15,462; net income. $20,163; quick assets, $89 268, current assets, $97,008; total assets, $119,968, current liabilities, $780; total liabilities, $780 and total equity, $119,188. Compute the gross margin ratio (both with and without services revenue) and net profit margin ratio. (Round your answers to 1 decimal place.)

Explanation / Answer

Solution:

Calculation of gross margin ratio (both with and without services revenue):

Computer services revenue = 26,995

Net sales (of goods) = 21,894

Total sales and revenues = 48,889

Cost of goods sold = 15,462

Gross margin (including service revenue) = Total revenue Cost of goods sold

= 48,889 - 15,462

= 33,427

Gross Margin Ratio (with services revenue) =

Gross profit (with services)/ Sales revenue (including services revenue)

= 33,427/ 48,889

= 0.683733

= 68.37%

Gross margin (excluding service revenue) = Net (goods) sales Cost of goods sold

= 21,894 - 15,462

= 6,432

Gross margin ratio without services revenue =

Gross margin (excluding service revenue)/ Sales revenue (excluding services revenue)

= 6,432/ 21,894

= 0.293779

= 29.38%

Net income = 20,163

Net profit margin ratio = Net income/ Sales

= 20,163/ 48,889

= 0.412424

= 41.24%

Related Questions

Navigate

• Browse (All)
• Browse U
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.