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Compute the profit margin ratio for year 2013.

Question:

The condensed financial statements of Soule Company for the years 2013 and 2014 are presented below.

Soule Company
Balance Sheets (in EUR)
December 31
2014 2013
Current Assets
Cash and cash equivalents 330 360
Accounts receivable (net) 470 433
Invnetory 430 390
Prepaid expenses 120 160
     Total Current Assets 1,350 1,343
Property, plant, and equipment 420 380
Investments 10 10
Intangibles and other assets 530 510
Total Assets 2,310 2,243
Current Liabilities 900 810
Long-term liabilities 390 393
Stockholders' equity - common 1,020 1,040
Total liabilities and stockholders' equity 2,310 2,243

Soule Company
Income Statements
For the year ended December 31
2014 2013
Sales revenue 4,000 3,600
Cost and expenses
     Cost of goods sold 984 895
     Selling and administrative expenses 2,400 2,330
     Internet expenses 10 20
Total costs and expenses 3,394 3,245
Income before income taxes 606 355
Income tax expense 242 142
Net income 364 213

Compute the profit margin ratio for year 2013.

Net Income:

Net income is determined in the income statement and it presents the difference between the revenues generated and the expenses incurred. The income statement starts with determining the gross profit, then the operating income which is followed by net income at last.

Answer and Explanation:

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How to Calculate Net Profit Margin: Definition & Formula

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Chapter 5 / Lesson 21
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Study the net profit margin definition and learn how to find net profit margin of a business. See how the formula is used to calculate net profit margin.


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