How Is the Net Income Percentage Calculated

question 32

Multiple Choice

How is the net income percentage calculated?

• A)Net Sales divided by net Income
• B)Net Income divided by net Sales
• C)Total stockholders' equity divided by net sales
• D)Net Income divided by Gross Margin

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Definitions:

Treasury Stock

Shares that were issued and subsequently reacquired by a company, held in its own treasury.

Stockholders' Equity

Represents the owners' residual interest in the assets of a corporation after deducting liabilities.

Prior Period Adjustment

Corrections of material errors related to a prior period or periods, excluded from the determination of net income.

Retained Earnings

The portion of a company's profits that is kept or retained for reinvestment in the business, rather than being distributed to shareholders as dividends.