profit margin ratio
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![**Evaluating Firm Profitability**
The following financial information is taken from the annual reports of the Smith Company and the Wesson Company:
| | Smith | Wesson |
|--------|-----------|-----------|
| Net income | $10,000 | $100,000 |
| Net sales | $50,000 | $400,000 |
Calculate the profit margin ratio for each company.
Note: Round answers to one decimal place, if necessary (ex: 15.4%).
| Profit margin ratio | |
|---------------------|--------|
| Smith | 0 % |
| Wesson | 0 % |
Which company is more profitable?
- [ ] Smith Company
- [ ] Wesson Company
[Check]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F11ff9f03-4cfd-4604-9eab-3af23331f424%2Fbb929c6a-aa3d-4f97-a98f-4c0da5acdd5f%2Fhlez1yr_processed.png&w=3840&q=75)
Transcribed Image Text:**Evaluating Firm Profitability**
The following financial information is taken from the annual reports of the Smith Company and the Wesson Company:
| | Smith | Wesson |
|--------|-----------|-----------|
| Net income | $10,000 | $100,000 |
| Net sales | $50,000 | $400,000 |
Calculate the profit margin ratio for each company.
Note: Round answers to one decimal place, if necessary (ex: 15.4%).
| Profit margin ratio | |
|---------------------|--------|
| Smith | 0 % |
| Wesson | 0 % |
Which company is more profitable?
- [ ] Smith Company
- [ ] Wesson Company
[Check]
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