In 1996,Snout and Smith,Inc.had a gross profit of $27,000 on sales of $110,000.S & S's operating expenses for 1996 were $13,000,and its net profit margin was .0585.Snout and Smith had no interest expense in 1996.Using this information,what was S & S's operating profit margin for 1996?
A)0.245
B)0.118
C)0.127
D)0.157

Question

Quizplus · Accepted Answer

Operating profit margin is calculated by dividing operating profit by total revenue.

Operating profit = Gross profit - Operating expenses 
Operating profit = $27,000 - $13,000 = $14,000

Total Revenue = Sales 
Total Revenue = $110,000

Therefore, Operating Profit Margin = Operating Profit / Total Revenue 
Operating Profit Margin = $14,000 / $110,000 = 0.127

Thus, the correct answer is C) 0.127.