Peartree Ltd Provides the Following Extracts from Its Income Statement

question 39

Multiple Choice

Peartree Ltd provides the following extracts from its income statement for the year 2016:
$$\begin{array} { | l | l | } \hline \text { Net sales } & \$ 560,000 \\\hline \text { Cost of sales } & ( 200,000 ) \\\hline \text { Gross profit } & \$ 360,000 \\\hline\end{array}$$
Calculate the gross profit percentage.

• A) 64.29%
• B) 100%
• C) 35.71%
• D) 45%

---

Definitions:

Return On Equity

This is a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how much profit a company generates with the money shareholders have invested.

Retained Earnings

Retained earnings represent the cumulative amount of net income a company retains for reinvestment in its operations rather than paying it out as dividends.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing ownership interest.

Gross Margin Percentage

A financial metric that measures the proportion of money left over from revenues after accounting for the cost of goods sold, expressed as a percentage.