The following Income Statement is for Engineered Products, Inc. Income Statement
ID: 2586259 • Letter: T
Question
The following Income Statement is for Engineered Products, Inc. Income Statement-December 31, 2014 to December 31, 2015 $1,000 Operating Revenues and Expenses Operating Revenues Sales 22,400 250 22,150 Total Operating Revenues Operating Expenses Cost of goods and services sold Labor 6,000 3,000 Materials Indirect cost Selling and promotion Depreciation General and administrative Lease payment Total Operati 900 250 6,000 600 22,750 Total Operating Income Nonoperating Revenues and Expenses 30 Rents Interest receipts Interest 200 150 -450 Total rating Income Net Income before Tax Income Taxes Net Profit (loss) for 2015 -450 Determine the following Net Profit/Loss before tax 1. 2. Net Profit/Loss Ratio 3. Interest Coverage 4. Identify the reasons behind the bad performance of this companyExplanation / Answer
1 net profit / loss before tax answer net loss -450 2 net profit / loss ratio for the purpose net profit / loss ratio , sales shall be taken after sales returns and net profit shall be taken from the operating activities , the non operating activities shall not be taken sales sales - reruns 22400 - 250 22150 net profit total operating income - tax .-600 - 0 -600 net profit / loss ratio net profit after tax / sales .-600 / 22150 -2.71% 3 interest coverage ratio earnings before interest and tax / interest expenses earnings before interest and tax total operating income interest coverage ratio .-600 / 80 -7.5 4 the reasons behind the bad performance of the company is the operating expenses are more than the operating income which contributes to the loss and the bad performance of the company