How is the return on sales (net profit margin)calculated?
A) Net income/Shareholders' equity
B) Net income/Sales
C) Net income/Total assets
D) Sales/Shareholders' equity

Question

Quizplus · Accepted Answer

Return on sales, also known as net profit margin, is calculated by dividing the net income by the total sales. This ratio helps to determine how much profit a company is able to generate from its sales revenue. Option B represents the correct formula for calculating the net profit margin. Options A, C, and D are not relevant to the calculation of net profit margin.

How Is the Return on Sales (Net Profit Margin)calculated