Question

Blossom Company reported net sales of $263,000, cost of goods sold of $157,800, operating expenses of $49,500, net income of $42,080, beginning total assets of $482,800, and ending total assets of $626,100. Calculate profit margin and gross profit rate. (Round answers to 1 decimal place, e.g. 10.2%.)

Answer 1

The profit margin and gross profit rate of Blossom Company are  16% and 66.67%

What is profit margin?

The profit margin is a ratio of a company's profit (sales minus all expenses) divided by its revenue. The profit margin ratio compares profit to sales.

Profit margin

= Net income / Net sales = $

= $42,080 / $263,000

= 16%

Gross profit rate

= Goss profit divided / Net sales x 100

First, we need to compute the gross profit.

Gross profit

= Net sales - Cost of goods sold

= $263,000 - $157,800

= $105,200

Then,

Gross profit rate

= $105,200 / $157,800

= 66.67%

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