Question

The following amounts were taken from the financial statements of Leaf Company: 2020 2019 Total assets $900000 $1000000 Net sales 840000 650000 Gross profit 352000 320000 Net income 138600 117000 Weighted average number of common shares outstanding 90000 90000 Market price of common stock $35 $39 The profit margin for 2020 is 16.5%. 15.4%. 10.7%. 41.9%.

Answer 1

Answer:

The profit margin for 2020 is 16.5%

Explanation:

Total assets                           $900,000  $100,0000

Net sales                                $840,000  $650,000

Gross profit                            $352,000  $320,000

Net income                             $138,600   $117,000

Weighted average number of common shares outstanding 90,000 90,000 Market price of common stock $35 $39

Profit Margin Ratio = Net Income / Net Sales

Profit Margin Ratio = $138,600 /  $840,000 = 16,5%