Question

Accounts payable=45,000
Accounts receivable=122,400
Accruals=13,500
Additional paid in capital=216,660
Common Stock @ par value=42,000
COGS=178,385.00
Depreciation expense=22,370.00
Interest expense=16,944.00
Inventories=115,200
Long-term debt=139,645.00
Net fixed assets=399,600
Notes payable=64,800
Operating expenses (excl. depr.)=61,655.00
Retained earnings=136,800
Sales=335,454.00
Taxes=18,953.00
What is the firm's net profit margin?

Answer 1

To calculate the firm's net profit margin, we first need to determine the net income. The net profit margin is defined as net income divided by total sales.

1. **Calculate Total Revenue (Sales)**:
\[
\text{Sales} = 335,454.00
\]

2. **Calculate Total Expenses**:
- Cost of Goods Sold (COGS): \(178,385.00\)
- Operating expenses (excluding depreciation): \(61,655.00\)
- Depreciation expense: \(22,370.00\)
- Interest expense: \(16,944.00\)
- Taxes: \(18,953.00\)

Let's sum these expenses:
\[
\text{Total Expenses} = \text{COGS} + \text{Operating Expenses} + \text{Depreciation} + \text{Interest} + \text{Taxes}
\]
\[
\text{Total Expenses} = 178,385.00 + 61,655.00 + 22,370.00 + 16,944.00 + 18,953.00
\]
\[
\text{Total Expenses} = 298,307.00
\]

3. **Calculate Net Income**:
\[
\text{Net Income} = \text{Sales} - \text{Total Expenses}
\]
\[
\text{Net Income} = 335,454.00 - 298,307.00
\]
\[
\text{Net Income} = 37,147.00
\]

4. **Calculate Net Profit Margin**:
\[
\text{Net Profit Margin} = \frac{\text{Net Income}}{\text{Sales}} \times 100
\]
\[
\text{Net Profit Margin} = \frac{37,147.00}{335,454.00} \times 100
\]
\[
\text{Net Profit Margin} \approx 11.09\%
\]

So, the firm's net profit margin is approximately **11.09%**.