Proﬁt margin is deﬁned as:
A) EBIT divided by sales.
B) Cost of goods sold divided by sales.
C) Net income divided by sales.
D) Net income divided by total assets.
E) EBIT divided by total assets.

Question

Quizplus · Accepted Answer

Profit margin is the ratio of net income to sales, also known as net profit margin. This measures the percentage of profit generated from each dollar of sales. Option A is the equation for operating profit margin, option B is the equation for gross profit margin, option D is the equation for return on assets, and option E is the equation for return on investment.

Proﬁt Margin Is Deﬁned As