Year 2 Year 1 Net Sales $478,500 $426,250 Cost of goods sold $276,300 $250,120 I

Question

                                                                     Year 2                     Year 1

Net Sales                                                   $478,500                 $426,250

Cost of goods sold                                     $276,300                 $250,120

Interest expense                                        $9,700                     $10,700

Net income before tax                               $67,250                    $52,680

Net Income after tax                                  $46,050                    $39,900

Total assets                                               $317,100                 $288,000

Total liability                                              $181,400                  $167,300

Total equity                                                $135,700                  $120,700

What is the profit margin for year 2?

Explanation / Answer

Hi,

Please find the answer as follows:

Gross Profit Margin = (Sales - Cost of Goods Sold)/Sales*100 = (478500 - 276300)/478500*100 = 42.26%

Net Profit Margin = Net Income After Taxes/Sales* 100 = 46050/478500*100 = 9.6238 of 9.62%

Thanks.

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