Question

You have just reviewed the financial statements of Penelope's Candy Store (PCS). You have determined that PCS has a Profit Margin of 19%. How do you explain this to owner Penelope Hassey?

Answer 1

Answer and Explanation:

Penelope Hassey has to assume that the total sale of the firm is $100 and given that the Profit Margin ratio is 19%.

The scenario shows that on every $100 of sale company get a net profit margin of $19

Note :

Profit margin = Net sales × Profit margin ration

Profit margin = $100 × 19%

Profit margin = $19