In the year that just ended, Callaway Lighting had sales of $5,470,000 and incurred cost of goods sold equal to $4,460,000.
Question 5. (15 points total) (Profitability and capital structure analysis) In the year that just ended,Callaway Lighting had sales of $5,470,000 and incurred cost of goods sold equal to $4,460,000. Thefirm's operating expenses were $128,000 and its increase in retained earnings was $42,000 for the year.There are currently 99,000 common stock shares outstanding and the firm pays a $4.770 dividend pershare. The firm has $1,180,000 in interest-bearing debt on which it pays 7.7 percent interest.a. (5 points) Assuming the firm's earnings are taxed at 35%, construct the firm's income statement.Income StatementRevenues$ 5,470,000Cost of Goods Sold4,460,000Gross Profit$Operating ExpensesNet Operating Income$Interest ExpenseEarnings before Taxes$Income TaxesNet Income$b. (5 points) Calculate the firm's operating profit margin and net profit margin. (Round to onedecimal place.)The operating profit margin isThe net income margin is