Chapter Two Is a Paperback Book Exchange Store

question 55

Multiple Choice

Chapter Two is a paperback book exchange store. For each book trade, the buyer pays a $1 trade fee. Books that are sold and not traded cost half of their original purchase price. The store has total assets of $126,000, current assets of $40,200, and liabilities totalling $160,900. Its net sales equalled $35,000, and its net profit after taxes was $9,000. Calculate the store's net profit margin.

• A) 27.7 percent
• B) 21.7 percent
• C) 7.1 percent
• D) 25.7 percent
• E) 22.4 percent

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Definitions:

Total Liabilities

The cumulative amount of all debts and obligations that a company owes to external parties or entities.

Priority

The status afforded to certain debts, making them more important or urgent to pay off compared to others in the context of liquidation or bankruptcy.

Unsecured Liability

A financial obligation that does not have collateral backing, meaning creditors may not have claims on the borrower's assets if the debt is not repaid.

Salaried Employees

Workers who are paid a fixed regular amount, typically monthly or biweekly, regardless of hours worked, as opposed to being paid hourly.