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    Luvlace's Avatar
    Luvlace Posts: 2, Reputation: 1
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    #1

    Jul 6, 2008, 08:40 AM
    Calculating Profit Margin
    Profit Margin = Net Income / Revenue

    A company reported net income of $37,925 and net sales of $390,000 for the current year. Calculate the profit margin and interpret the result. Assume that the company competitors’ average profit margin is 15%.


    15% = $37,925/$390,000

    .5689/$390,000


    Okay, here is were I'm stuck. I don't know if I'm calculating this correctly and if I am what's next. Please help!:eek: :confused: :(
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    Jul 6, 2008, 12:51 PM
    The competitor's average is 15%, not the answer to your company. They wouldn't be asking you to calculate it if you already had it. Just do the net income/revenue for your company, like the equation says. You're trying to turn this into something way more complicated than it is.

    In fact, where did you get the .5689? That isn't the answer to the division. And you couldn't have gotten this out of your "equation" because it doesn't even equal itself.
    Luvlace's Avatar
    Luvlace Posts: 2, Reputation: 1
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    #3

    Jul 6, 2008, 03:59 PM
    Quote Originally Posted by morgaine300
    The competitor's average is 15%, not the answer to your company. They wouldn't be asking you to calculate it if you already had it. Just do the net income/revenue for your company, like the equation says. You're trying to turn this into something way more complicated than it is.

    In fact, where did you get the .5689? That isn't the answer to the division. And you couldn't have gotten this out of your "equation" because it doesn't even equal itself.
    This is why I'm so confused. If someone can help direct me to the right path or formula then maybe I would be able to work it out myself.
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    morgaine300 Posts: 6,561, Reputation: 276
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    #4

    Jul 7, 2008, 09:57 PM
    I'm already giving you the simpliest thing you can do: the equation you quoted... net income/revenue. That's it. There isn't anything else I can tell you cause I already did, but you're trying to make it complicated.
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