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:

Market Portfolio

A theoretical bundle of investments that includes every type of asset available in the market, with each asset weighted according to its total market capitalization.

Beta

A measure of a stock or portfolio's volatility in relation to the overall market, indicating its relative risk.

Firm Size

A measure of a company's scale or magnitude, often based on metrics such as revenue, assets, or number of employees.

Book Value

The net value of a company's assets minus its liabilities, often used to assess the company's worth on its balance sheet.