The balance sheet of Hidden Valley Farms reports total assets of $450,000 and $550,000 at the beginning and end of the year,respectively.Net income and sales for the year are $100,000 and $800,000,respectively.What is Hidden Valley's profit margin?
A)10%.
B)12.5%.
C)18%.

Question

Quizplus · Accepted Answer

Profit margin is calculated by dividing net income by total sales.
Profit margin = (Net Income / Sales) x 100%
Substituting the given values, 
Profit margin = (100,000 / 800,000) x 100% = 12.5%
Hence, the correct answer is B)12.5%.

The Balance Sheet of Hidden Valley Farms Reports Total Assets