A company has revenues of $700,000; invested capital of $3,000,000; total debt of $ 1,500,000 of which it pays 2.5% interest; current,long-term,and other assets totalling $4,000,000; and total expenses of $550,000.What is the company's operating profit margin?

Question

Quizplus · Accepted Answer

Operating Profit Margin = Operating Profit / Revenues
We can find the operating profit by subtracting the total expenses from the revenues:
Operating Profit = Revenues - Total Expenses
Operating Profit = $700,000 - $550,000
Operating Profit = $150,000

Now, we can calculate the operating profit margin:
Operating Profit Margin = Operating Profit / Revenues
Operating Profit Margin = $150,000 / $700,000
Operating Profit Margin = 0.21

Therefore, the operating profit margin of the company is 0.21 or 21%, which is option C.

A Company Has Revenues of $700,000; Invested Capital of $3,000,000;