calculate the firm’s net profit margin. Round the answers to two decimal places
ID: 2776228 • Letter: C
Question
calculate the firm’s net profit margin.
Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box).
Balance Sheet December 31, 2013
Cash and marketable securities
$112,000
Accounts payable
$211,000
Accounts receivable
$325,000
Notes payable
$51,500
Inventories
$426,000
Accrued expenses
$50,100
Prepaid expenses
$10,700
Total current liabilities
$312,600
Total current assets
$873,700
Long-term debt
$225,000
Gross fixed assets
$1,514,000
Par value and paid-in-capital
$117,000
Less: accumulated depreciation
$315,000
Retained Earnings
$1,418,100
Net fixed assets
$1,199,000
Common Equity
1,535,100
Total assets
$2,072,700
Total liabilities and owner’s equity
$2,072,700
Income Statement, Year of 2013
Net sales (all credit)
$3,256,600.00
Less: Cost of goods sold
$2,572,714.00
Selling and administrative expenses
$323,000.00
Depreciation expense
$115,000.00
EBIT
$245,886.00
Interest expense
$29,600.00
Earnings before taxes
$216,286.00
Income taxes
$86,514.40
Net income
$129,771.60
Cash and marketable securities
$112,000
Accounts payable
$211,000
Accounts receivable
$325,000
Notes payable
$51,500
Inventories
$426,000
Accrued expenses
$50,100
Prepaid expenses
$10,700
Total current liabilities
$312,600
Total current assets
$873,700
Long-term debt
$225,000
Gross fixed assets
$1,514,000
Par value and paid-in-capital
$117,000
Less: accumulated depreciation
$315,000
Retained Earnings
$1,418,100
Net fixed assets
$1,199,000
Common Equity
1,535,100
Total assets
$2,072,700
Total liabilities and owner’s equity
$2,072,700
Explanation / Answer
Net profit margin:
It shows how much of company’s revenues are kept as net income. Generally it is expressed as a percentage.
The formula for net profit margin is as follows:
=Net income/Sales revenue
=$129,771.6/$3,256,600*100
=3.98%
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