Question

Roselawn Company reported net sales of $90,000 and net income of $18,000 for the previous year ended December 31. The company reported net sales of $100,000 and net income of $20,000 for the current year ended December 31. Total assets amounted to $200,000 at December 31 of the previous year and $246,000 at December 31 of the current year. The company’s profit margin for the current year ended December 31 (rounded to the nearest decimal point) is:

Answer 1

Answer:

The company’s profit margin for the current year ended December 31 (rounded to the nearest decimal point) is 20%

Explanation:

Use the following formula to calculate the Profit Margin

Profit Margin = $\frac{Net Income}{Net Sales} X 100$

Where

Net Income = $20,000

Net Sales = $100,000

Placing values in the formula

Profit Margin = $\frac{20000}{100000} X 100$

Profit Margin = 0.2 x 100

Profit Margin = 20%