Question

Halabi's market has annual sales of $813,200, total debt of $171,000, total equity of $396,000, and a net profit margin of 5.78 percent. What is the net profit of Halabi's market?

1) $46,994
2) $47,994
3) $48,994
4) $49,994

Answer 1

The net profit of Halabi's market is calculated by multiplying the annual sales of $813,200 by the net profit margin of 5.78 percent, resulting in a net profit of approximately $46,994.

Step-by-step explanation:

The net profit of Halabi's market is calculated by applying the net profit margin to the annual sales. The net profit margin is a percentage that represents what portion of each dollar in sales a company actually retains in earnings. In this case, Halabi's market has a net profit margin of 5.78 percent. To calculate the net profit, we use the following formula:

Net Profit = Annual Sales × Net Profit Margin

Using the given data:

Net Profit = $813,200 × 5.78% = $813,200 × 0.0578 = $46,994.16

Therefore, the correct answer is 1) $46,994 when rounded to the nearest dollar.