A firm's net profit margin increased from 8.1% to 8.3% from 2014 to 2015.If net income increased from $4.5 million to $5.6 million,what was the change in the firm's sales?
A)$55 million
B)$21 million
C)$0.1 million
D)$11.9 million
E)$1.1 million

Question

Quizplus · Accepted Answer

We can use the formula:

Net Profit Margin = (Net Income / Sales) x 100

Using the information provided, we can create two equations:

8.1 = (4.5 / Sales) x 100

8.3 = (5.6 / Sales) x 100

Simplifying these equations, we get:

Sales = 4.5 / 0.081 = 55.6 
Sales = 5.6 / 0.083 = 67.5

The change in sales is:

67.5 - 55.6 = 11.9

Therefore, the answer is D) $11.9 million.

A Firm's Net Profit Margin Increased from 8