The profit margin is calculated by dividing
A) sales by cost of goods sold.
B) gross profit by net sales.
C) net income by stockholders' equity.
D) net income by net sales.

Question

Quizplus · Accepted Answer

The profit margin indicates how much profit a company earned from its sales. This can be calculated by dividing the net income (total profit) by the net sales (total revenue generated from sales). Choice D is the only option that correctly calculates the profit margin using these two variables. Thus, D is the best choice.

The Profit Margin Is Calculated by Dividing