Profitability ratios The Haines Corp. shows the following financial data for 2009 and 2010. 2009 2010 Sales $ 2,500,000 $3,000,000 Cost of goods sold 1,500,000 1,875,000 Gross Profit 1,000,000 1,125,000 Selling & administrative expense 205,000 210,000 Operating Profit 795,000 915,000 Interest expense 40,000 45,000 Income before taxes 755,000 870,000 Taxes 264,250 304,500 Income after taxes $490,750 $565,500 For each year, compute the following and indicate whether it is increasing or decreasing profitability in 2010 as indicated by the ratio.
a. Cost of goods sold to sales.
b. Selling and administrative expense to sales.
c. Interest expenses to sales.