Question

Network Systems, Inc., had net sales of $750,000, cost of goods sold of $562,500, and net income of $100,000. Its gross margin ratio is closest to: 4.00. 1.88. 0.25. 0.12.

Answer 1

Answer:

0.25

Explanation:

Dividing a company’s gross profit by its net sales and expressing it as a percentage gives the gross margin ratio.

Mathematically:

Gross margin ratio =[ (Total revenue - cost of goods sold)/Total revenue] * 100%

= (750,000 - 562,500)/750,000 * 100%

187500/750000 * 100% = 25% or 0.25