USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
The Rollerball Corporation's industry averages are as follows:
Net Profit Margin = 7.5%; Total Asset Turnover = 2.2; Total Assets/Equity = 2.0
Rollerball Corporation has the following financial statements for year ending 12/31/2008. (000's omitted)

-Refer to Exhibit 9.16. Calculate Rollerball Corporation's Net Profit Margin.
A) 3.9%
B) 8.4%
C) 14.6%
D) 40.4%
E) 41.8%

Question

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
The Rollerball Corporation's industry averages are as follows:
Net Profit Margin = 7.5%; Total Asset Turnover = 2.2; Total Assets/Equity = 2.0
Rollerball Corporation has the following financial statements for year ending 12/31/2008. (000's omitted)
  
-Refer to Exhibit 9.16. Calculate Rollerball Corporation's Net Profit Margin.
A) 3.9% 
B) 8.4% 
C) 14.6% 
D) 40.4% 
E) 41.8%

Quizplus · Accepted Answer

Net Profit Margin = Net Income/Total Revenue
= $2,400,000/$28,500,000 = 8.4%
This is lower than the industry average of 7.5%, indicating that Rollerball Corporation needs to improve the efficiency of its operations to increase its profitability.