### Profit Margin Calculation ExerciseA company reported net income of $4,805 for October. Its net sales for October were $15,500. Its profit margin is:**Multiple Choice:**- ⬜ 7%- ⬜ 31%- ⬜ 3%- ⬜ 323%- ⬜ 200%#### Explanation:In this exercise, we are looking to calculate the company's profit margin for October using the given financial information. Profit margin is calculated using the formula:\[ \text{Profit Margin} = \left( \frac{\text{Net Income}}{\text{Net Sales}} \right) \times 100 \]Given:- Net Income = $4,805- Net Sales = $15,500Substitute these values into the formula:\[ \text{Profit Margin} = \left( \frac{4,805}{15,500} \right) \times 100 \]Simplify the fraction:\[ \frac{4,805}{15,500} \approx 0.31065 \]Convert to a percentage:\[ 0.31065 \times 100 \approx 31.065\% \]Based on this calculation, the answer to the multiple choice question is:- ⬜ 7%- ✅ 31%- ⬜ 3%- ⬜ 323%- ⬜ 200%This shows that the company's profit margin for October is approximately 31%.

Profit margin refers to the measurement tool which measures the degree of profitability of a…

Answered: A company reported net income of $4,805…

A company reported net income of $4,805 for October. Its net sales for October were $15,500. Its profit margin is: Multiple Choice 7%. O ( 31%. 3%. 323%. 200%.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: A firm has an ROA of 7.4%, sales of $80, and total assets of $100. What is its profit margin? O…

A: We need to use the following two ratios for calculation of profit margin first we need to calculate…

Q: Richard's Sporting Goods reports net income of $180,000, net sales of $530,000, and average assets…

A: The return on assets is calculated as ratio of net income and average assets.

Q: Martinez Corporation reported net sales of $772,000, net income of $135,000, and total assets of…

A: Profit margin= Net income/net Sales *100

Q: Sarasota Corp. reported net sales $ 600,000, cost of goods sold $ 336,000, operating expenses $…

A: Formula: Profit margin = ( Net income / Net sales ) x 100

Q: Chavin Company had the following results during August: net operating income, $300,000; turnover, 4;…

A: Average Operating Assets The assets which are used in the ongoing business operations of the company…

Q: A company's net sales are $817,990, its costs of goods sold are $449,895, and its profit is…

A: Lets understand the basics. Gross profit margin is a margin generated on sales. It is derived by…

Q: Richard's Sporting Goods reports net income of $160,000, net sales of $570,000, and average assets…

A: Profit Margin = (Net Income / Net Sales)

Q: Candy Company had sales of $320,000 and cost of goods sold of $112,000. What is the gross profit…

A: Gross profit margin helps in assessing how much the company has after paying all the costs which are…

Q: The Sports Shack reports net income of $120,000, sales of $1,200,000, and average assets of…

Q: A company reported a sale revenue for $700,000. The gross profit margin is 60% and the selling…

A: Definition: Net income: Net income is the excess amount of revenue that arises after deducting all…

Q: Flitter reported net income of $23,500 for the past year. At the beginning of the year the company…

A: Return on Assets: Return on assets denotes the relationship between a…

Q: A company had net income of $2,680,000, net sales of $25,100,000, and average total assets of…

A: The return on total assets ratio measures how efficiently a particular company uses its assets to…

Q: Bogs company has a net profit margin of 5%, an operating profit margin of 10%, and a gross profit…

A: Gross Profit = Sales Revenue x Gross Profit Margin Cost of Goods Sold = Sales - Gross Profit

Q: Additionally, the company informed the following: Net income = $156,042 Sales = $4,063,589…

A: The objective of the question is to calculate the current ratio, quick ratio, and days’ sales…

Q: A company's net sales were $724,200, its cost of goods sold was $244,050 and its net income was…

A: GROSS MARGIN RATIO Gross Margin is the ratio between Gross Profit & Net Sales Revenue. Gross…

Q: XYZ Ltd. has earned 8% Return on Total Assests of GHS 50,00,000 and has a Net Profit Ratio of 5%.…

A: Ratio is the tool which is used to evaluate the firm’s performance by establishing relation between…

Q: The balance sheet of ATLF, Inc. reports total assets of $1,950,000 and $2,050,000 at the beginning…

A: Profit margin ratio is calculating by dividing the net income by net sales.

Q: Marino Company has provided the following information: Net sales, $480,000 Net income, $24,000…

A: NET INCOME MARGIN Net Income Margin is the Ratio between Net Income During the Year & Net…

Q: XYZ Ltd. has earned 8% Return on Assets of $. 50,00,000 and has a Net Profit Ratio of 5%. Find out…

A: A business or a corporation is established with the ultimate goal of earning profits and profits are…

Q: Pharoah reported the following information for its fiscal year end: On net sales of $56.600 billion,…

A: A ratio that helps to evaluate how much portions of the sales revenue of a company turns in the…

Q: Ash Company reported sales of $550,000 for Year 1, $600,000 for Year 2, and $650,000 for Year 3.…

A: Trend percentages are used to compare two or more financial percentages. These trend are used to…

Q: Martinez Corporation reported net sales of $777,000, net income of $130,000, and total assets of…

A: Solution = profit margin= net income /net income

Q: Rotablade's net income was $600,000 on sales of $24 million for the year. Average assets for the…

A: Return on Investment: This percentage shows how much profit we have made by investing in how many…

Q: If a firm had sales of $340,000 during a period and sales returns and allowances of $28,000, its net…

A: Net sales are the difference between total sales and sales return and allowances. It indicates the…

Q: Nerf Mania reports net income of $500,000, net sales of $4,000,000, and average assets of…

A: The objective of the question is to calculate the profit margin for Nerf Mania. The profit margin is…

Q: Gross profit ratio of a company was 25%. Its credit sales was $ 20,00,000 and its cash sales was…

A: We have the following information: Gross profit ratio: 25% Credit Sales: $2,000,000 Cash Sales: 10%…

Q: A company made net sales revenue of $500,000, and cost of goods sold totaled $300,000. Calculate its…

A: When two numerical values are compared with each other, the result is known as a ratio. Ratio…

Q: A company's income statement shows net income of $22,000. Service Revenue is reported to be…

A: The ratio analysis helps to analyse the financial statements of the business on the basis of various…

Q: Rappaport Corp.s sales last year were $320,000, and its net income after taxes was $23,000. What was…

A: Profit Margin on Sales = Net Income after taxes / Sales

Q: If a company has net sales of $500,000 and cost of goods sold of $350,000, the gross profit…

A: Gross Profit: Gross Profit is the difference between the net sales, and the cost of goods sold.…

Q: 6A. During the current year, Sokowski Manufacturing earned income of $489,887 from total sales of…

A: The sales margin is calculated as ratio of income and total sales.

Q: Operating profit margin is 8.65%. Sales to assets ratio is 3.20. Assets are 630,000. Equity is…

A: Net income is the amount of money that an entity earned after deducting all the expenses from the…

Q: The following extract relates to X Co for the years ended 30 June 20X5 and 20X6: 20X5 20X6 Revenue…

A: We have the following information: Revenue20X5: $20,00020X6: $26,000 Cost of Sales20X5:…

Q: ompute Profit Margin if Net İncome:2.026 ; Sales:17.193 ;Total Assets: 31.483 ; Total Equity:…

A: Given information : Net İncome = 2.026 Sales = 17.193 Total Assets = 31.483 Total Equity = 12.804

Q: Using the data below, compute lan's return on sales ratio for the month of January. Net Sales…

A: Return on sales ratio: The ratio which evaluates the amount of net income earned for every dollar of…

Q: The following information is available to you for the Wooden Company:…

A: This ratio indicates the profit margin on sales i.e amount earned on the sales. it can be calculated…

Q: The following figures relate to Keeffe Ltd. Sales 350,000 Gross Profit 105,000 Net Profit 63,000…

A: Gross profit is the excess of revenue over the cost of goods sold and net profit is the excess of…

Q: United importers report net income $50,000 and COGS of $300,000. If the company’s gross profit rate…

A: Gross profit = Net sales - Cost of goods sold If Gross profit = 40%, Cost of goods sold = 60%

Q: A company had a profit margin of 15%. If net income equaled $44,000 and average total assets equaled…

A: Lets understand the basics. For calculating net sales, we need to use below formula. Profit margin =…

Q: The income statement of Racquel Jeter Consulting (RJC) has a gross profit of $107,000, and its gross…

A: Given, The Gross profit margin is 42% Gross profit is $107,000.

Q: A company shows the following balances: $2,500,000 Sales Revenue Sales Returns and 450,000…

A: Gross profit is the amount of profit earned by an entity after spending on all the expenses to earn…

Q: If a company has sales revenue of $631000, net sales of $500000, and cost of goods sold of $385000,…

A: The gross profit is calculated as difference between sales and cost of goods sold. Gross profit= Net…

Question

### Profit Margin Calculation Exercise

A company reported net income of $4,805 for October. Its net sales for October were $15,500. Its profit margin is:

**Multiple Choice:**

- ⬜ 7%
- ⬜ 31%
- ⬜ 3%
- ⬜ 323%
- ⬜ 200%

#### Explanation:

In this exercise, we are looking to calculate the company's profit margin for October using the given financial information. Profit margin is calculated using the formula:

\[ \text{Profit Margin} = \left( \frac{\text{Net Income}}{\text{Net Sales}} \right) \times 100 \]

Given:
- Net Income = $4,805
- Net Sales = $15,500

Substitute these values into the formula:

\[ \text{Profit Margin} = \left( \frac{4,805}{15,500} \right) \times 100 \]

Simplify the fraction:

\[ \frac{4,805}{15,500} \approx 0.31065 \]

Convert to a percentage:

\[ 0.31065 \times 100 \approx 31.065\% \]

Based on this calculation, the answer to the multiple choice question is:

- ⬜ 7%
- ✅ 31%
- ⬜ 3%
- ⬜ 323%
- ⬜ 200%

This shows that the company's profit margin for October is approximately 31%.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Monroe Milk Company has a gross margin of 31.7% on net sales of $9,865,214 and total assets of $7,125,852. The company has a current ratio of 2.7 times, accounts receivable of $1,715,363, cash of $315,488, and current liabilities of $870,938. Based on the information above, what are the days of sales outstanding?
A company has net income of $300,000, net sales of $2,500,000, and total assets of $2,000,000. Its return on total assets equals a. 6.7%. c. 8.3%. e. 15.0%. b. 12.0%. d. 80.0%.
Calculate net profit ratio from the following data: Sales returns 1,00,000 Administration expenses ? 10,000 Gross profit ? 40,000 Selling expenses 10,000 Income from investment 5,000 Loss on account of fire 3,000
Du Pont Analysis TRP has total receiveables of $3,000, which represents 20 days sales. Total assets are $75,000. The operating profit margin is 5%. Find the firms ROA and its assets turnover ratio.
Lyndale, Inc.'s sales are $365,000 and $280,000 during the current and prior years, respectively. The percentage change is: Multiple Choice 1.2%. 77.0%. 30.4%. 23.3%
A company's gross profit (or gross margin) was $73,920 and its net sales were $352, 000. Its gross margin ratio is: A.21% B.73, 670 C.66% D.276, 130 E.1%
Louisville Inc. reported the following financial data for one of its divisions for the year; average invested assets of $560,000; sales of $1,020,000; and income of $123,420. The investment center profit margin is: Multiple Choice 182.1%. 22.0%. 12.1%. 54.9%. 453.7%.
Royce Corp's sales last year were $250,000, and its net income was $23,000. What was its profit margin? a. 9.38% b. 9.57% c. 8.37% d. 9.20% e. 11.32%
Last year a company had sales of $410,000, a turnover of 2.1, and a return on investment of 29.4%. The company's net operating income for the year was: Multiple Cholce $63,140 $195,238 $120,540 $57.400
During the current year, Sokowski Manufacturing earned income of $459,595 from total sales of $6,290,139 and average capital assets of $10,730,071. What is the sales margin? Round to the nearest hundredth, two decimal places and submit the answer in a percentage.
Anthony Corporation reported the following amounts for the year: Net sales 296,000 Cost of goods sold 138,000 Average inventory 50,000 Anthony's gross profit ratio is: 53.4%. 51.9%. 50.3%. 46.6%. Anthony's average days in inventory is: 70 days. 114 days. 132 days. 151 days. A company's sales equal $60,000 and cost of goods sold equals $20,000. Its beginning inventory was $1,600 and its ending inventory is $2,400. The company's inventory turnover ratio equals: 5 times. 10 times. 20 times. 30 times. [Last question is in the picture attached]