Consider the following: Lumber Revenues, $120,000; Hardware Revenues, $90,000; Cost of Sales, $130,000; All other costs and expenses, $35,000; Investment Income, $8,000; Income Tax Expense, $13,000; Net Income, $40,000. What is the net profit margin?

19.05%

Explanation:

Data provided in the question:

Lumber Revenues = $120,000

Hardware Revenues = $90,000

Cost of Sales = $130,000

All other costs and expenses = $35,000

Investment Income = $8,000

Income Tax Expense = $13,000

Net Income = $40,000

Now,

The net profit margin = [ (Net income) : (Total revenue) ] * 100%

or

The net profit margin = [ $40,000 : ($120,000 + $90,000) ] * 100%

or

The net profit margin = [ $40,000 : $210,000 ] * 100%

or

The net profit margin = 0.1905 * 100%

or

The net profit margin = 19.05%