Herbst Company presented the following data at the end of 2019:
Determine the company's return on sales (rounded)
A) 37%
B) 33%
C) 30%
D) 39%

Question

Herbst Company presented the following data at the end of 2019:
 Determine the company's return on sales (rounded)
A) 37% 
B) 33% 
C) 30% 
D) 39%

Quizplus · Accepted Answer

Net Income = (Net sales revenue - Cost of goods sold - Operating expenses) x (1 - Income tax rate)
X = ($962,500 - $375,000 - $90,000) x (1 - 0.025)
X = $497,500 x 0.75
X = $373,125
Return on sales ratio = Net income / Net sales
X = $373,125 / $962,500
X = 0.39 = 39%

Herbst Company Presented the Following Data at the End of 2019