SIE Exam Question 49: Answer and Explanation

Question: 49

Net profit aftertaxes:	$18,000	Stockholder'sEquity:	$170,000
Total revenues:	$615,000	Preferred dividends:	$5,000
Total assets:	$340,000	Number of commonshares outstanding:	3,800
Current assets:	$280,000	Current liabilities:	$85,000
Earnings per share:	$4.75	Market price:	$49.50

What is the net profit margin?

• A. 10.59 percent
• B. 10.42 percent
• C. 2.92 percent
• D. 3.29 percent

Correct Answer: C

Explanation:

The net profit margin is 2.92 percent (18,000/615,000).