When evaluating the profit margin of a sole proprietorship,the formula should be modified by subtracting owner's equity from net income.This will factor in the value of the owner's efforts in running the business.

Question

Quizplus · Accepted Answer

Profit margin is calculated as net income divided by revenue, and does not involve subtracting owner's equity. Owner's equity is not considered in the profit margin calculation.

When Evaluating the Profit Margin of a Sole Proprietorship,the Formula