Canadian Bacon Inc. financial statements are presented in the table below. Based

Question

Canadian Bacon Inc. financial statements are presented in the table below.

Based on the information in the table, calculate the firm’s gross profit margin.

Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box).

Balance Sheet December 31, 2014

Income Statement, Year of 2014

Cash and marketable securities $132,000 Accounts payable $399,000 Accounts receivable $311,000 Notes payable $98,500 Inventories $512,000 Accrued expenses $89,300 Prepaid expenses $11,300 Total current liabilities $586,800 Total current assets $966,300 Long-term debt $799,400 Gross fixed assets $2,104,000 Par value and paid-in-capital $298,000 Less: accumulated depreciation $398,000 Retained Earnings $988,100 Net fixed assets $1,706,000 Common Equity 1,286,100 Total assets $2,672,300 Total liabilities and owner’s equity $2,672,300

Explanation / Answer

Refer to the income statement and balance sheet to calculate the value of gross profit margin.

Gross profit margin is the metric used to measure the financial health of a business.

It is calculated as follows:

Gross profit margin = revenue – cost of goods sold / revenue

In the above scenario sales is considered to be the revenue for the company.

Calculate the value of gross profit margin as follows:

Gross profit margin = $4,276,600.00 - $3,292,982.00 / $4,276,600.00

= $983618 / $4,276,600.00

= 0.23

=0.23*100

= 23 %

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