Brown Company has net income of $125,000.Its net sales were $1,739,000 and its average total assets were $2,750,000.Its profit margin was 7.2%.

Question

Quizplus · Accepted Answer

Profit margin is calculated as net income divided by net sales, expressed as a percentage.

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

Given: 
Net Income = $125,000 
Net Sales = $1,739,000

Profit margin = (125,000 / 1,739,000) x 100 = 7.2%

Therefore, the statement "Its profit margin was 7.2%" is true.

Brown Company Has Net Income of $125,000