On January 1,2011,a company has assets of $16 billion and shareholders' equity of $8 billion.On January 1,2012,the same company has assets of $20 billion and shareholders' equity of $9 billion.During 2011,the company had total sales revenue of $900 million and total expenses of $700 million.If the company doesn't have other sources of revenue,its net profit margin during 2011 is:

Question

Quizplus · Accepted Answer

Net profit margin is calculated as net profit divided by total revenue. In order to calculate net profit, we need to subtract total expenses from total revenue:

Net profit = Total revenue - Total expenses
Net profit = $900 million - $700 million
Net profit = $200 million

Now we can calculate the net profit margin:

Net profit margin = Net profit / Total revenue
Net profit margin = $200 million / $900 million
Net profit margin = 0.22 or 22%

Therefore, the answer is choice C, with a net profit margin of 0.22 or 22%.

On January 1,2011,a Company Has Assets of $16 Billion and Shareholders