Here is some financial statement information for a business. Calculate the profit margin ratio for the current year.

Calculate your answer as a percentage to one decimal place. Do not include the '%' symbol in your answer.

Prior year Current year
Cash 207 395
Accounts receivable 149 339
Short-term investments 117 124
Inventory 320 313
Property, plant and equipment 1,169 1,079
Sales 4,000 7,128
Net profit 2,000 4,222
Share capital 3,500 3,500

Question

Here is some financial statement information for a business. Calculate the profit margin ratio for the current year.

Calculate your answer as a percentage to one decimal place. Do not include the '%' symbol in your answer.

Prior year	Current year
Cash	207	395 
Accounts receivable	149 	339 
Short-term investments	117 	124 
Inventory	320 	313 
Property, plant and equipment	1,169 	1,079 
Sales	4,000	7,128
Net profit	 2,000	4,222 
Share capital	 3,500	3,500

BlackTom AI · Accepted Answer

The task is to calculate the profit margin ratio for the current year and express it as a percentage to one decimal place, without the percent symbol.

First, identify the required values from the current year data: Net profit = 4,222 and Sales (revenue) = 7,128.

Profit margin ratio is defined as Net profit divided by Sales: Profit margin = Net profit / Sales.

Compute the division: 4,222 ÷ 7,128 ≈ 0.592 (to three decimals).

Convert to a percentage by multiplying by 100: 0.592 × 100 = 59.2%.

Since the instruction requests the answer without the '%' symbol, the numeric result to one decimal place is 59.2.

Rounding considerations: the raw ratio 0.5920 would be 59.20% if written with a percent symbol; rounding to one decimal place in the numeric form yields 59.2.

Summary of steps:
- Extract current year net profit and sales.
- Compute net profit divided by sales.
- Convert to a percentage.
- Round to one decimal place and remove the percent sign as required.

BACC011 Week 6: Practice Quiz

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