In 2019, Arrow Co. incurred cost of goods sold of $56,073 million on gross sales revenue of $76,643 million. Sales returns and allowances were $5,606 million. What was Arrow Co.'s profit margin for 2019? (Assume no other expenses.)

Question

Quizplus · Accepted Answer

Net Sales = Gross sales revenue - Sales returns and allowances
X = $76,643 - $5,606
X = $71,037 = Net Sales
Net income = Net Sales - Cost of goods sold
X = $71,037 - $56,073
X = $14,964 = net income
Profit margin = Return on sales ratio
Return on sales ratio = Net income / Net sales
X = $14,964 / $71,037
X = 0.211 = 21.1%