A company has the following balances: Sales revenue $312,000: Sales Returns and Allowances $2,000: Sales Discounts $4,000: Cost of Goods Sold $184,000: Operating Expenses $84,000. Assume there are no other revenues, other expenses, or income tax expense. How much is the profit margin?

The profit margin is 12.4%

Explanation:

Profit margin is used to measure the amount of profit. It is the amount by which the money gotten from sells exceed the cost in a business. It is the ratio of net income to net sales

Net sales = Sales revenue - (sales discounts + sales returns and allowances)

Net sales = $312000 - ($4000 + $2000) = $312000 - $6000 = $306000

Net income = Net sales - cost of goods sold - operating expenses

Net income = $306000 - $184000 - $84000 = $38000

Profit margin = Net income / net sales

Profit margin = $38000/$306000 = 0.124 = 12.4%.