Question

The balance sheet of Purdy's BBQ reports total assets of $800,000 and $900,000 at the beginning and end of the year, respectively. Net income and sales for the year are $85,000 and $1,700,000, respectively. What is Purdy's profit margin? A. 5%. B. 10%. C. 20%. D. 50%.

Answer 1

Purdy's profit margin is 5%, option A.

Step-by-step explanation:

Assets at the beginning = $800,000

Assets at the end = $900,000

The profit margin can be calculated by dividing net income by sales and multiplying by 100. In this case, the net income is $85,000 and the sales are $1,700,000.

Profit margin = (Net income / Sales) * 100

Profit margin = (85,000 / 1,700,000) * 100 = 5%.

Therefore, Purdy's profit margin is 5%, option A.

Answer 2

The profit margin for Purdy's BBQ is calculated by dividing the net income by sales and converting to a percentage, which results in 5%, making the correct answer A. 5%.

Step-by-step explanation:

The profit margin of Purdy's BBQ can be calculated by taking the net income and dividing it by the total sales for the year, then multiplying by 100 to convert it into a percentage. The formula to calculate profit margin is (Net Income / Sales) × 100. Using the figures provided, Purdy's profit margin would be calculated as follows: ($85,000 / $1,700,000) × 100 = 5%. Therefore, the correct answer is A. 5%.