Kearin Corporation has provided the following financial data: Dividends on commo

Question

Kearin Corporation has provided the following financial data:

  

Dividends on common stock during Year 2 totaled $8,000. The market price of common stock at the end of Year 2 was $2.02 per share.

The company's net profit margin percentage for Year 2 is closest to:

3.9%

2.5%

38.5%

1.6%

Balance Sheet
December 31, Year 2 and Year 1 Assets Year 2 Year 1 Current assets:       Cash    $33,000 $100,000       Accounts receivable      281,000 250,000       Inventory          122,000 130,000       Prepaid expenses            68,000           80,000 Total current assets 504,000 560,000 Plant and equipment, net               1,016,000        980,000 Total assets    $1,520,000   $1,540,000       Liabilities and Stockholders' Equity Current liabilities:       Accounts payable         $80,000 $100,000       Accrued liabilities          31,000 30,000       Notes payable, short term                  56,000         70,000 Total current liabilities   167,000 200,000 Bonds payable        260,000       260,000 Total liabilities          427,000       460,000 Stockholders' equity:       Common stock, $5 par value    500,000 500,000       Additional paid-in capital-common stock         70,000 70,000       Retained earnings                 523,000         510,000 Total stockholders' equity              1,093,000      1,080,000 Total liabilities & stockholders' equity       $1,520,000     $1,540,000

Explanation / Answer

Net profit margin=net income/net sales

Which is equal to

=(21000/1,300,000)

=1.6%(Approx)

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