Network Systems, Inc., had net sales of $750,000, cost of goods sold of $562,500, and net income of $100,000. Its gross margin ratio is closest to: 4.00. 1.88. 0.25. 0.12.

Question

Randy Tanner

Business

9 June, 11:14

Network Systems, Inc., had net sales of $750,000, cost of goods sold of $562,500, and net income of $100,000. Its gross margin ratio is closest to: 4.00. 1.88. 0.25. 0.12.

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Answers (1)

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Barton · Answer 1

0.25

Explanation:

Dividing a company's gross profit by its net sales and expressing it as a percentage gives the gross margin ratio.

Mathematically:

Gross margin ratio = [ (Total revenue - cost of goods sold) / Total revenue] * 100%

= (750,000 - 562,500) / 750,000 * 100%

187500/750000 * 100% = 25% or 0.25