The Poole Company reported the following income for Year 2: $\begin{array}{lr}
\text {Sales}&\$38,000\
\text {Cost of goods sold}&\underline{9,600}\
\text {Gross margin}&\$28,400\
\text {Selling and administrative expense}&\underline{16,600}\
\text { Operating income } & \$ 16,800\
\text { Interest expense } & \underline{5,600} \
\text {Income before taxes } & \$11,200 \
\text { Income tax expense } & \underline{ 3,360} \
\text { Net income } & \underline{\$ 7,840}
\end{array}$
What is the company's net margin? (Round your answer to 2 decimal places.)
A) 44.21%
B) 29.47%
C) 20.63%
D) 74.74%

Question

The Poole Company reported the following income for Year 2: $\begin{array}{lr}
\text {Sales}&\$38,000\
\text {Cost of goods sold}&\underline{9,600}\
\text {Gross margin}&\$28,400\
\text {Selling and administrative expense}&\underline{16,600}\
\text { Operating income } & \$ 16,800\
\text { Interest expense } &  \underline{5,600} \
 \text {Income before taxes } & \$11,200 \
\text { Income tax expense } & \underline{ 3,360} \
\text { Net income } &  \underline{\$ 7,840}
\end{array}$ 
 What is the company's net margin? (Round your answer to 2 decimal places.)
A) 44.21%
B) 29.47%
C) 20.63%
D) 74.74%

Quizplus · Accepted Answer

Net margin is calculated as (Net Income / Sales) * 100. For Poole Company, it is ($7,840 / $38,000) * 100 = 20.63%.

The Poole Company Reported the Following Income for Year 2