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omeli [17]
4 years ago
11

Financial information is presented below:

Business
1 answer:
VARVARA [1.3K]4 years ago
8 0

Answer:

Net Income  $21,000

Net Sales  $140,000

Operating Margin ratio = 14%

Explanation:

Net Income is calculated by subtracting operating expenses from gross income.

Net is is calculated by adjusting contra sales account balance is sales value+

Profit Margin ratio is the ratio of net profit to sales value.

                                                          $

Sales Revenue                             150,000

Sales Discount                             (3,000)

Sales returns and allowances     <u>(7,000)</u>

Net Sales                                      140,000

Cost of Goods sold                      <u>(91,000)</u>

Gross Income                                49,000

Operating Expenses                    <u>(28,000)</u>

Operating / Net Income                21,000

In the absence of interest expenses and tax rate operating income is considered as net income.

Operating Margin = ( $21,000 / $150,000 ) x 100 = 14%

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