Assume the following data: EBIT = 400; Tax = 100; Sales = 3,000; Average total assets = 1,500. Calculate the profit margin.
A)10.0 percent
B)18.3 percent
C)7.5 percent
D)26.7 percent

Question

Quizplus · Accepted Answer

The profit margin is calculated as Net Income divided by Sales. Net Income is EBIT minus Tax, which is 400 - 100 = 300. Therefore, the profit margin is (300 / 3,000) * 100 = 10.0 percent.

Assume the Following Data: EBIT = 400; Tax = 100;