Assume a company has 10 million shares of stock outstanding and that its Income

Question

Assume a company has 10 million shares of stock outstanding and that its Income Statement for Year 12 is as follows: Income Statement Data Year 12 (in 000s) Net Revenues from Footwear Sales $ 300,000 Cost of Pairs Sold 190,000 Warehouse Expenses 15,000 Marketing Expenses 40,000 Administrative Expenses 8,000 Operating Profit (Loss) 47,000 Interest Income (expenses) (10,000) Pre-tax Profit (Loss) 37,000 Income Taxes 11,100 Net Profit (Loss) $ 25,900 Based on the above income statement data, the company's operating profit margin and EPS are Select one: a. 15.7% and $2.59. b. 15.7% and $4.70. c. 8.6% and $5.29. d. 12.3% and $3.70. e. 12.3% and $2.59.

Which is the answer?

Explanation / Answer

Operating profit margin = Operating profit / Sales

= $47,000,000 / $300,000,000
= 15.7%

EPS = Net profit / Oustanding no. of shares

= $25,900,000 / 10,000,000

= $2.59

Therefore, option (a) 15.7% and $2.59

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