Question

Swifty Corporation reported net sales of $260,000, cost of goods sold of $156,000, operating expenses of $63,000, net income of $31,200, beginning total assets of $530,000, and ending total assets of $644,900. Calculate profit margin and gross profit rate. (Round answers to 1 decimal place, e.g. 10.2%.) Profit margin enter percentages rounded to 1 decimal place % Gross profit rate enter percentages rounded to 1 decimal place %

Answer 1

gross profit rate = 40%

for every dolalr of sales after paying the goods there is left 40 cents

profit margin: 12%

for every dollar of sales 12 cents are left as profit

Step-by-step explanation:

Swifty Corporation reported:

net sales 260,000

cost of goods sold 156,000

operating expenses (63,000)

net income 31,200

gross profit rate:

`(sales-COGS)/(sales) =(gross \: profit)/(sales)`

gross profit: 260,000 - 156,000 = 104,000

104,000 / 260,000 = 40%

profit margin:

`(income)/(sales)`

31,200/260,000 = 0.12 = 12%