Question

Consider the following condensed financials for Crean and Crimson Foods: INCOME STATEMENT: 2013 Sales $114,750.00 Cost of Goods Sold $68,850.00 Gross Margin $45,900.00 Depreciation $19,200.00 Administrative Costs $10,800.00 EBIT $15,900.00 Interest $4,000.00 Pre-tax income $11,900.00 Taxes $4,760.00 Net Income $7,140.00 Dividends $0.00 Addition to Retained Earnings $7,140.00 BALANCE SHEET AS OF 12/31/2013: ASSETS 2013 Cash $6,000.00 Inventory $18,467.00 Accounts Receivable $17,212.50 Current Assets $41,679.50 Net PPE $92,000.00 Total Assets (TA) $133,679.50 LIABILITIES & SHAREHOLDER EQUITY 2013 Accounts Payable $30,000.00 Current Liabilities $30,000.00 Long Term Debt $46,539.50 Total Liabilities $76,539.50 Shareholder Equity $57,140.00 Total Liabilities and Shareholder Equity $133,679.50 Find the net profit margin for the firm for 2013?

Answer 1

Net profit margin is the percentage of revenue left after all expenses have been deducted from sales. The measurement reveals the amount of profit that a business can extract from its total sales. The net sales part of the equation is gross sales minus all sales deductions, such as sales allowances. The formula is:

(Net profits ÷ Net sales) x 100 = Net profit margin

Solution

Net Income = 7140.

Total Sales = 114750

Net profit Margin = 71400/114750*100 = 6.2%