se the following comparative Income Statements to calculate the Profit Margin Ra

Question

se the following comparative Income Statements to calculate
the Profit Margin Ratio for 2007.

                
                                                      2007                   2006

Sales                                 $507,924,000     $392,190,000

Cost of sales                       330,466,000       249,667,000

Gross Margin                       177,458,000        142,523,000

Operating Expenses               91,444,000     75,646,000

Net Operating income           86,014,000     66,877,000

Interesting Expense                3,293,000     3,523,000

Net Income before taxes       82,721,000     63,354,000

Income taxes                        27,530,000  20,900,000

Net Income                        55,191,000     42,454,000

Explanation / Answer

Profit Margin ratio is just = (Net Income)/(Sales) which is = (55,191,000)/(507,924,000) which is equal to 10.87%

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