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25 September, 06:22

Consider the following: Lumber Revenues, $120,000; Hardware Revenues, $90,000; Cost of Sales, $130,000; All other costs and expenses, $35,000; Investment Income, $8,000; Income Tax Expense, $13,000; Net Income, $40,000. What is the net profit margin?

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  1. 25 September, 06:42
    0
    19.05%

    Explanation:

    Data provided in the question:

    Lumber Revenues = $120,000

    Hardware Revenues = $90,000

    Cost of Sales = $130,000

    All other costs and expenses = $35,000

    Investment Income = $8,000

    Income Tax Expense = $13,000

    Net Income = $40,000

    Now,

    The net profit margin = [ (Net income) : (Total revenue) ] * 100%

    or

    The net profit margin = [ $40,000 : ($120,000 + $90,000) ] * 100%

    or

    The net profit margin = [ $40,000 : $210,000 ] * 100%

    or

    The net profit margin = 0.1905 * 100%

    or

    The net profit margin = 19.05%
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