Question

The following amounts were taken from the financial statements of Leaf Company: 2020 2019 Total assets $900000 $1000000 Net sales 840000 650000 Gross profit 352000 320000 Net income 138600 117000 Weighted average number of common shares outstanding 90000 90000 Market price of common stock $35 $39 The profit margin for 2020 is 16.5%. 15.4%. 10.7%. 41.9%.

Answer 1

The profit margin for 2020 is 16.5%

Step-by-step explanation:

Total assets $900,000 $100,0000

Net sales $840,000 $650,000

Gross profit $352,000 $320,000

Net income $138,600 $117,000

Weighted average number of common shares outstanding 90,000 90,000 Market price of common stock $35 $39

Profit Margin Ratio = Net Income / Net Sales

Profit Margin Ratio = $138,600 / $840,000 = 16,5%