Asked by Brittany Orozco on Jun 23, 2024
Verified
Which of the following equations is correct?
A) Profit margin = net income/sales
B) Profit margin = assets + liabilities
C) Profit margin = revenue - expenses
D) Profit margin = net income/total assets
E) Profit margin = net income/stockholder's equity
Total Assets
The sum of all current and non-current assets owned by an individual or a business entity.
Stockholder's Equity
The residual interest in the assets of a corporation after deducting liabilities, representing ownership interest.
- Identifying and calculating key financial ratios and their significance.
Verified Answer
MA
Mallory AndersonJun 24, 2024
Final Answer :
A
Explanation :
Profit margin is calculated by dividing net income by sales (or revenue), which measures how much out of every dollar of sales a company actually keeps in earnings.
Learning Objectives
- Identifying and calculating key financial ratios and their significance.