Compute Profit Margin Ratio Given the Following Information

question 175

Multiple Choice

Compute profit margin ratio given the following information.
Cost of Goods Sold $28,000
Net Income 21,400
Gross Profit 400,000

• A)5%
• B)7%
• C)1.65%
• D)6.64%
• E)76.42%

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Definitions:

Risk-free Asset

An asset which is presumed to have a guaranteed return with no risk of financial loss.

Beta

A benchmark for the changeability, or structural risk, found in a security or an assemblage of investments measured against the overall market.

Portfolio Variance

A measure used in finance to quantify the volatility from the mean return of a portfolio, indicating the spread of its returns.

Cyclical Stock

A stock whose price is affected by macroeconomic changes in the overall economy and tends to rise and fall with the business cycle.