A farm business manager has just finished preparing end of year financial statements for the business. The following financial information was determined:
Current assets – beginning of year $200,000
Total assets – beginning of year $600,000
Current liabilities – beginning of year $100,000
Total liabilities – beginning of year $150,000
Total equity – beginning of year $450.000
Current assets – end of year $250,000
Total assets – end of year $800,000
Current liabilities – end of year $150,000
Total liabilities – end of year $300,000
Total equity – end of year $500,000
Gross revenue $600,000
Net farm income from operations $115,000
Operating expense $425,000
Farm interest expense $20,000
Depreciation expense $45,000
Owner withdrawals (for unpaid labor and Mgt.) $50,000
Non-farm income $35,000
What is the farm business' operating profit margin ratio?
| a. |
.1063 |
|
| b. |
.1083 |
|
| c. |
.1917 |
|
| d. |
.1417 |
| Gross revenue | 6,00,000 |
| Net farm income from operations | 1,15,000 |
| Operating profit margin calculation | =115000/600000 |
| Operating profit margin | 0.1917 |
| Answer: c. 0.1917 |
Get Answers For Free
Most questions answered within 1 hours.