Question

Truman had total assets of $149,501,000, net income of $6,276,090, and net sales of $209,203,000. Its...

Truman had total assets of $149,501,000, net income of $6,276,090, and net sales of $209,203,000. Its profit margin was 3%.

True or false??
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Answer #1

Profit margin,also called as Net profit margin or Net profit ratio is calculated to meadure the profitability of the company.It is computed by using the following formula:

Profit margin =Net income ÷ Annual sales

To represent it in the form of percentage, multiply it with 100

Now, it is given in the question,

Net income= $6,276,090

Net sales = $209,203,000

Profit margin =( Net income÷Net sales)×100

= (6276090÷ 209203000)

=0.03

3%

Profit margin = 3%

Thus the given statement is TRUE

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