Identify the Formula Used to Calculate Profit Margin

question 67

Multiple Choice

Identify the formula used to calculate profit margin.

• A) Profit margin = Sales ÷ Operating income
• B) ​Profit margin = Operating income ÷ Invested assets
• C) Profit margin = Invested assets ÷ Operating income
• D) Profit margin = Operating income ÷ Sales

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Definitions:

Retained Earnings

The portion of a company's profits that is kept or retained within the business for reinvestment or to pay down debt, instead of being distributed to shareholders as dividends.