Question

Find the net profit margin if earnings before interest and taxes is $20,000, net income is $10,000, sales are $50,000, and total assets are $100,000.A. 40% B. 20% C. 10% D. 30%

Answer 1

option (B) 20%

Step-by-step explanation:

Data provided in the question:

Earnings before interest and taxes = $20,000

Net income = $10,000

Sales = $50,000

Total assets = $100,000

Now,

Net profit margin = [ Net income ÷ Sales ] × 100%

thus,

Net profit margin = [ $10,000 ÷ $50,000 ] × 100%

or

Net profit margin = 0.2 × 100%

or

Net profit margin = 20%

Hence,

the correct answer is option (B) 20%