Fruhling Company presented the following data at the end of 2019:
Determine the company's return on sales (rounded)
A) 31%
B) 28%
C) 33%
D) 25%

Question

Fruhling Company presented the following data at the end of 2019:
 Determine the company's return on sales (rounded)
A) 31% 
B) 28% 
C) 33% 
D) 25%

Quizplus · Accepted Answer

Net Income = (Net sales revenue - Cost of goods sold - Operating expenses) x (1 - Income tax rate)
X = ($1,100,000 - $500,000 - $240,000) x (1 - 0.025)
X = $360,000 x 0.75
X = $270,000
Return on sales ratio = Net income / Net sales
X = $270,000 / $1,100,000
X = 0.25 = 25%

Fruhling Company Presented the Following Data at the End of 2019