A firm has net sales of $65,000, operating expenses of $21,300, depreciation of $5,000, cost of goods sold of $36,500, and interest expense of $4,500. What is the operating margin?
A)−2.8%
B)2.6%
C)3.4%
D)9.2%
E)10.3%

Question

Quizplus · Accepted Answer

Operating margin = (Net sales - COGS - Operating expenses - Depreciation) / Net sales
= ($65,000 - $36,500 - $21,300 - $5,000) / $65,000
= $2,200 / $65,000
= 0.034 or 3.4%.
Therefore, the operating margin is 3.4% which is option C.

A Firm Has Net Sales of $65,000, Operating Expenses of $21,300