If a Firm Earns a Net Profit of $100,000 on Sales

question 39

Multiple Choice

If a firm earns a net profit of $100,000 on sales of $2,000,000, its net profit margin is:

• A)5%.
• B)10%.
• C)15%.
• D)3.5%.
• E)1.5%.

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Definitions:

Investment Worth

The value of an investment, taking into account both potential returns and risk level.

Compounded Semiannually

Refers to the process where interest is added to the principal balance of a loan or deposit twice a year, effectively increasing the amount of interest earned or paid.

Promissory Note

A financial document in which one entity guarantees to pay a certain amount of money to another, either when asked or at an agreed-upon date in the future.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.