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25 June, 13:31

Find the net profit margin if earnings before interest and taxes is $20,000, net income is $10,000, sales are $50,000, and total assets are $100,000. A. 40% B. 20% C. 10% D. 30%

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  1. 25 June, 13:55
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    option (B) 20%

    Explanation:

    Data provided in the question:

    Earnings before interest and taxes = $20,000

    Net income = $10,000

    Sales = $50,000

    Total assets = $100,000

    Now,

    Net profit margin = [ Net income : Sales ] * 100%

    thus,

    Net profit margin = [ $10,000 : $50,000 ] * 100%

    or

    Net profit margin = 0.2 * 100%

    or

    Net profit margin = 20%

    Hence,

    the correct answer is option (B) 20%
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