Question

Use the following information to compute profit margin for each separate company a through e. (Round your answers to 1 decimal place.)

Company Net income Net sales Profit Margin
a. $5,253 $44,140
b. 86,033 392,846
c. 90,324 251,598
d. 63,120 1,434,550
e. 72,787 428,158

Required:
Which of the five companies is the most profitable according to the profit margin ratio?

Answer 1

the Company C is the most profitable

Step-by-step explanation:

The computation of the profit margin for the following companies is

We know that

Profit margin = Net income ÷ Net sales

Now

Company Net income Net sales Profit margin

a $5,253 $44,140 11.9%

b $86,033 $392,846 21.9%

c $90,324 $251,598 35.9%

d $63,120 $1,434,550 4.4%

e $72,787 $428,158 17.0%

Based on the calculation above, the Company C is the most profitable