Use this balance sheet and income statement to answer the following question.Use ending balances whenever average balances are required for computing ratios. The profit margin for National Textile is

Question

Use this balance sheet and income statement to answer the following question.Use ending balances whenever average balances are required for computing ratios.   The profit margin for National Textile is

Quizplus · Accepted Answer

The profit margin is calculated by dividing the net income by the total revenue. From the income statement, we can see that the net income is $10,000, and the total revenue is $50,000 (average of beginning and ending balances of sales). 
Profit margin = 10,000/50,000 = 0.20 or 20%.
Therefore, the best choice is C, which is 20 percent.

Use This Balance Sheet and Income Statement to Answer the Following