P3-21.

Ratio proficiency
LG 6; Basic
a. Gross profit = sales x gross profit margin
Gross profit = $40,000,000 x 0.8 = $32,000,000
b. Cost of goods sold = sales - gross profit
Cost of goods sold = $40,000,000 - $32,000,000 = $ 8,000,000
c. Operating profit = sales x operating profit margin
Operating profit = $40,000,000 x 0.35 = $14,000,000
d. Operating expenses = gross profit - operating profit
Operating expenses = $32,000,000 - $14,000,000 = $18,000,000
e. Earnings available fpr common sharehoulders
= sales x net profit margin = $40,000,000 x 0.08 = $3,200,000
f. Total assets = sales = $40,000,000 = S20.000.000
total asset turnover 2
g. Total common equity = carnings available for common shareholders
ROE
= $3,200,000
0,20
= $16,000,000
h. Accounts receivable = average collection period x sales
365
= 62.2 days x $40,000,000
365

= 62.2 x $109,589.041

= $6,816,438.36