Profit margin is equal to ________.
A)net income divided by total assets
B)net income divided by total owners' equity
C)net income divided by sales
D)None of these

Question

Quizplus · Accepted Answer

Profit margin is calculated by dividing net income by sales. This ratio helps to evaluate the profitability of a company by measuring how much profit a company earns for every dollar of sales. Options A and B are incorrect as they calculate return on assets and return on equity ratios respectively, which are different from the profit margin ratio. Option D is incorrect as there is a specific formula to calculate profit margin.

Profit Margin Is Equal to ________