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Let's go through the problem step by step to find the pro forma gross profit margin ratio for Hildegard, Inc.

### Income Statement Data (in thousands):
- **Sales**: \$200,000
- **Cost of goods sold (COGS)**: \$60,800
- **Depreciation expense**: \$20,500
- **Other operating expenses**: \$33,600
- **Income tax expense**: \$16,530
- **Net income**: \$68,570

### Given Adjustments for the following year:
1. Increase in **sales**, **COGS**, and **cash** by 20%.
2. **Effective tax rate** of 30%.
3. Increase in **operating expenses** by 10%.
4. **No change in depreciation**.

### Step 1: Calculate the Adjusted Sales and COGS
- Sales increase by 20%:
  \[
  \text{New Sales} = 200,000 \times 1.20 = 240,000
  \]
  
- COGS increase by 20%:
  \[
  \text{New COGS} = 60,800 \times 1.20 = 72,960
  \]

### Step 2: Calculate Gross Profit
Gross profit is the difference between sales and COGS:
\[
\text{Gross Profit} = \text{Sales} - \text{COGS}
\]
\[
\text{Gross Profit} = 240,000 - 72,960 = 167,040
\]

### Step 3: Calculate the Gross Profit Margin
Gross profit margin is calculated as:
\[
\text{Gross Profit Margin} = \left(\frac{\text{Gross Profit}}{\text{Sales}}\right) \times 100
\]
\[
\text{Gross Profit Margin} = \left(\frac{167,040}{240,000}\right) \times 100 \approx 69.6\%
\]

### Answer:
The pro forma gross profit margin for Hildegard, Inc. is **69.6%**.

Would you like more details or have any questions about the steps?

Here are 5 related questions you might find helpful:
1. How does the increase in sales and COGS affect net income?
2. What would happen if the operating expenses increase more than 10%?
3. How does the effective tax rate impact profitability?
4. What other ratios can be derived from this income statement?
5. How would a change in depreciation impact the income statement?

**Tip**: When working with pro forma statements, always adjust both revenues and costs proportionately if there are percentage changes applied.

How much is Hildegard, Inc.'s pro forma gross profit margin ratio expected to be during the year, given an increase in sales, COGS, and cash by 20%, a 30% effective tax rate, a 10% increase in operating expenses, and no change in depreciation?

Learn how to calculate Hildegard, Inc.'s pro forma gross profit margin for the upcoming year, considering a 20% increase in sales, COGS, and cash, a 30% effective tax rate, and no change in depreciation. A detailed breakdown of the financial data and percentage changes is provided.

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