Twelve months ago, Genevieve's cupcake business had a net income of $36,250 and sales of $145,000. Now that this current year is coming to an end, she's determined that her business had a net income of $33,600 and sales of $168,000 over the last twelve months. What does Genevieve's net profit margin reveal about her business?
A) Her business is doing better this year than last; her net profit margin and sales are increasing.
B) Her business is fine; her net profit margin has remained stable and sales are increasing.
C) Her business is doing better this year than last; her net profit margin is decreasing.
D) Her business is not doing as well as it did last year; her net profit margin is decreasing.

Question

Quizplus · Accepted Answer

The net profit margin is calculated as (Net Income / Sales) * 100. For the previous year, it was ($36,250 / $145,000) * 100 = 25%. For the current year, it is ($33,600 / $168,000) * 100 = 20%. This shows a decrease in net profit margin, indicating the business is not doing as well as it did last year despite the increase in sales.

Twelve Months Ago, Genevieve's Cupcake Business Had a Net Income