1. Margin calculations Use the following income statement for McGwire-Sosa Lumber Co. to calculate gross and operating margins. McGwire-Sosa Limber 1999 Income Statement

Net sales

$4,000

Cost of goods sold

-3,200

Gross profit

$800

Operating expenses

-200

Operating income

$600

Other income

40

Net interest expense

-60

Pretax income

$580

Income tax

232

Net income

$348

Earnings per share

$1.74

Recent price

$38.28