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Financial statements for Askew Industries for 2016 are shown below (in $000 s). Determine the...

Question:

Financial statements for Askew Industries for 2016 are shown below (in $000's).

2016 Income Statement
Sales $9,700
Cost of goods sold ($6,475)
Gross profit $3,225
Operating expenses ($2,175)
Interest expense ($270)
Tax expense ($312)
Net income $468

Comparative Balance Sheets
Dec. 31
2016 2015
Assets
Cash $670 $570
Accounts receivable $670 $470
Inventory $870 $670
Property, plant, and equipment (net) $2,700 $2,800
$4,910 $4,510
Liabilities and Shareholder's Equity
Current liabilities $1,520 $1,270
Bonds payable $1,750 $1,750
Paid-in capital $670 $670
Retained earnings $970 $820
$4,910 $4,510

Determine the profit margin on sales for 2016.

Profit Margin:

The profit margin on sales looks at the portion of net profit of a company to the sales earned during the year. The higher the profit margin, the more profit is earned for every dollar of sales.

Answer and Explanation: 1

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We assume that the question talks about the net profit margin which is based on the net income and the sales for 2016. The formula is:

{eq}Profit\:ma...

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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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