Assume a companys Income Statement for a given period has the following entries:

Question

Assume a companys Income Statement for a given period has the following entries: Income Statement Data Quarter 1 (in 000s) Sales Revenues $50,000

Production Costs 26,500

Delivery Costs 1,600

Marketing Costs 8,500

Administrative Expenses 2,000

Operating Profit 14,400

Net Interest 750

Income Before Taxes 13,650

Taxes 4,095

Net Income $9,555

Based on the above income statement data, the company's operating profit margin and net profit margin are

28.8% and 19.1%.

17.7%

24.8% and 16.3%.

26.8 and 17.7%.

53.0% and 17.7%.

Explanation / Answer

The company's operating profit margin and net profit margin are 28.8% and 19.1%.

Operating profit margin = (Operating profit / Net sales)*100

Operating profit = 14,400

Net sales = sales revenues = 50,000

Operating profit margin = (14,400/50,000) * 100 = 28.8%

Net profit margin = Net income/Net sales = 9,555/50000 = 0.191= 19.1%

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