To calculate the net profit margin, we need to determine the firm's net profit and then divide it by total sales.
We can calculate net profit using the following formula:
\[ \text{Net Profit} = \text{Sales} - \text{Total Expenses} \]
Step 1: Calculate Total Expenses
Total expenses consist of Cost of Goods Sold (COGS), operating expenses (excluding depreciation), depreciation expense, interest expense, and taxes.
- Cost of Goods Sold (COGS): $176,212
- Operating Expenses (excluding depreciation): $60,293
- Depreciation Expense: $23,767
- Interest Expense: $16,196
- Taxes: $18,810
Now, we can add these expenses together:
\[ \text{Total Expenses} = \text{COGS} + \text{Operating Expenses} + \text{Depreciation} + \text{Interest} + \text{Taxes} \] \[ \text{Total Expenses} = 176,212 + 60,293 + 23,767 + 16,196 + 18,810 \] \[ \text{Total Expenses} = 295,278 \]
Step 2: Calculate Net Profit
Now, we can calculate net profit:
\[ \text{Net Profit} = \text{Sales} - \text{Total Expenses} \] \[ \text{Net Profit} = 335,488 - 295,278 \] \[ \text{Net Profit} = 40,210 \]
Step 3: Calculate Net Profit Margin
Now with net profit and sales available, we can calculate the net profit margin:
\[ \text{Net Profit Margin} = \left( \frac{\text{Net Profit}}{\text{Sales}} \right) \times 100 \] \[ \text{Net Profit Margin} = \left( \frac{40,210}{335,488} \right) \times 100 \] \[ \text{Net Profit Margin} \approx 11.99% \]
Thus, the firm's current year net profit margin is approximately 12.00%.
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