On January 1, 2011, a company has assets of $16 billion and stockholders' equity of $8 billion. On January 1, 2009, the same company has assets of $20 billion and stockholders' equity of $9 billion. During 2011, the
Company had total sales revenue of $9 billion and total expenses of $7 billion. If the company doesn't have other sources of revenue, its net profit margin during 2011 is:
A) 0.01
B) 0.013
C) 0.22
D) 0.022

Question

Quizplus · Accepted Answer

To calculate the net profit margin, we need to first calculate the net profit.

Net Profit = Total sales revenue - Total expenses 
Net Profit = $9 billion - $7 billion 
Net Profit = $2 billion

Now, we can calculate the net profit margin:

Net Profit Margin = (Net Profit / Total Sales Revenue) x 100 
Net Profit Margin = ($2 billion / $9 billion) x 100 
Net Profit Margin = 22.2%

Therefore, the net profit margin during 2011 is 0.22, which is answer choice C.

On January 1, 2011, a Company Has Assets of $16