The following amounts were taken from the financial statements of Blue Spruce Corp.: 20172016Total assets$821000$1017000Net sales744000656000Gross profit366000321000Net income111000118000Weighted average number of 97500 97500 common shares outstanding Market price of common stock$49$46The profit margin ratio for 2017 is14%.18%.16%.15%.

Net profit indicates the excess of revenue over total operating cost including the cost of goods sold. Net profit margin can be calculated by dividing net income by net sales.Profit margin ratio = Net income / Net sales For 2017 Profit margin ratio = 111,000 / 744,000 = 14.91 or 15% The correct answer is 15%

Answered: The following amounts were taken from…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following amounts were taken from the financial statements of Blue Spruce Corp.:

	2017	2016
Total assets	$821000	$1017000
Net sales	744000	656000
Gross profit	366000	321000
Net income	111000	118000
Weighted average number of	97500	97500
common shares outstanding
Market price of common stock	$49	$46

The profit margin ratio for 2017 is

14%.

18%.

16%.

15%.

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