Exercise 3-10 Computing and interpreting profit margin LO A1
Use the following information to compute profit margin for each separate company a through e. (Round your answers to 1 decimal place.)
Which of the five companies is the most profitable according to the profit margin ratio?
Company a
Company b
Company c
Company d
Company e
Answer
Company c
Explanation
Analysis and Interpretation: Company c has the highest profitability according to the profit margin ratio. Company c earns 35.0 cents in net income for every one dollar of net sales earned.
