Question

Given sales of $650,000, a gross margin of $320,000 and net income of $78,000, calculate the net profit margin. multiple choice question.

O 8.33%
O 24.4%
O 49.2%
O 12%

Answer 1

The net profit margin is calculated by dividing the net income by total sales and then multiplying by 100, resulting in a net profit margin of 12%. The correct answer is option 4.

Step-by-step explanation:

To calculate the net profit margin, we need to divide the net income by the total sales and then multiply by 100 to convert it to a percentage.

Using the provided figures, we divide $78,000 (net income) by $650,000 (sales), resulting in approximately 0.12.

To get the percentage, we multiply by 100, giving us a net profit margin of 12%.