Respuesta :
Answer:
10.22%
Explanation:
Data provided in the question:
Assets of Chang corp. = $375,000
Sales = $550,000
Net income = $25,000
Net Income required at 15% ROE = 15% × $375,000
= $56,250
Therefore,
The profit margin = [tex]\frac{\textup{Net income}}{\textup{Total sales}}\times100\%[/tex]
or
The profit margin = [tex]\frac{\textup{56,250}}{\textup{550,000}}\times100\%[/tex]
or
The profit margin = 10.22%
Answer:
Profit Margin = 10.227%
Explanation:
Given:
Total Assets = $375,000(Common equity)
Sales = $550,000
Net Income = $25,000
Return on equity = 15% = 15/100 = 0.15
Profit margin = ?
Computation of profit margin:
Profit margin = (Common Equity × Return on equity) / Sales
Profit Margin = ($375,000 x 0.15) / $550,000
Profit Margin = ($56,250) / $550,000
= 0.102272
Profit Margin = 10.227% (approx)
