In calculating the profit margin, net income is
A) subtracted from cost of goods sold.
B) added to profits.
C) divided by sales.
D) subtracted from sales.

Question

Quizplus · Accepted Answer

The profit margin is calculated by dividing net income by sales. This ratio shows how much profit a company is making for every dollar of sales. Therefore, net income is divided by sales, not subtracted or added to any other category in the calculation.

In Calculating the Profit Margin, Net Income Is