Question

Balance Sheet (Millions of $) Assets 2016 Cash and securities $ 1,554.0 Accounts receivable 9,660.0 Inventories 13,440.0 Total current assets $24,654.0 Net plant and equipment 17,346.0 $42,000.0 Total assets Liabilities and Equity Accounts payable Notes payable $7,980.0 5,880.0 Accruals 4,620.0 Total current liabilities $18,480.0 Long-term bonds 10,920.0 $29,400.0 Total liabilities Common stock 3,360.0 Retained earnings 9,240.0 $12,600.0 Total common equity Total liabilities and equity $42,000.0 Income Statement (Millions of $) 2016 Net sales $58,800.0 Operating costs except depreciation $54,978.0 $1,029.0 $ 2,793.0 Depreciation Earnings bef int and taxes (EBIT) Less interest 1,050.0 $ 1,743.0 Earnings before taxes (EBT) Taxes $610.1 $ 1,133.0 Net income Other data: Shares outstanding (millions) 175.00 $ 509.83 Common dividends Int rate on notes payable &L-T bonds 6.25% Federal plus state income tax rate 35% Year-end stock price $77.69 Refer to the data for Pettijohn Inc. What is the firm's profit margin? a. 2.12% b. 1.40% c. 1.93% d. 1.56% e. 1.73%

Answer 1

Net Profit Margin = Net Income / Net Sales

Net Profit Margin = 1133/58800 = 1.93%