Question

The Houston Chronicle reported on the profits of Oshman's Sporting Goods. For the fourth quarter, Oshman's reported net income of $7.3 million. That compares with a net income of $1.5 million the same quarter a year earlier. Net sales for the quarter increased 12.5% to $105.4 million.

1. What was Oshman's profit margin on net sales this quarter?
2. What was the percent increase in net income?
3. What were last year's net sales?
4. What was last year's profit margin on net sales?

Answer 1

Answer to the question

1. Oshman's profit margin on net sales this quarter

4th Quarter(current year's) net sales = $105.4m

4th Quarter(current year's) net income = $7.3m

Profit margin on net sales = $7.3m / $105.4m

= 6.926%

2. percent increase in net income

Net income (last year) = $1.5m

Net income (current year) =$7.3m

Increase in net income = $7.3m - $1.5m

= $5.8m

Percentage (%) increase =($5.8m/$1.5m)*100

= 386.67%

3. last year's net sales

Current year sale (4th Qtr) = $105.4m

It is given current net sales is after increade of 12.5% over last year's net sales.

Therefore,

Last year's net sales =( $105.4m /112.5)*100

= $93.69m

4.last year's profit margin on net sales

Last year's net sales = $93.69m

Last year's net income = $1.5m

Profit margin (last year) = ($1.5m/$93.69m)*100

= 1.60%