A firm reports a net profit margin of 10.0 percent on sales of $3 million when ignoring the effects of financing.If taxes are $200,000, how much is EBIT?
A)$100,000
B)$300,000
C)$500,000
D)$800,000 Net profit margin =

Question

Quizplus · Accepted Answer

The net profit margin is calculated as (Net Income / Sales). Given a net profit margin of 10% on $3 million sales, the net income is $300,000. Adding back taxes of $200,000 gives an EBIT of $500,000.

A Firm Reports a Net Profit Margin of 10