Question

You have obtained the following information for Blue Bell Farms. The tax rate is 34 percent.

Cash $ 124

Net fixed assets 2,498

Accrued expenses 135

Inventory 1,027

Long-term debt 1,876

Sales 3,850

Costs 2,220

Accounts payable 486

Depreciation 321

Interest paid 136

Accounts receivable 518

Dividends paid 281

What is the profit margin?

20.11%

4.58%

9.78%

7.30%

14.29%

Answer 1

Answer : Option A , 20.11%

Profit Margin = (1 - .34) ($3,850 - $2,220 - $321 - $136 ) / $3,850

= .66 × $1,173 / $3,850

= $774.18 / $3,850

= 20.11 %