Accounting Problem PLEASE HELP!!?

Question

The 2007 income statement of Ambrosia Enterprises shows operating revenues of $206,700, selling expenses of $52,200, general and administrative expenses of $47,110, interest expense of $1,020 and income tax expense of $27,000. Ambrosia’s stockholders’ equity was $335,000 at the beginning of the year and $385,000 at the end of the year. The company has 30,000 shares of stock outstanding at December 31, 2007.

Compute Ambrosia’s profit margin. Round the percentage to one decimal place.

I NEED THE ACTUAL # PLEASE HELP!

Answer 1

Profit Margin is a ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. It measures how much out of every dollar of sales a company actually keeps in earnings. We use net income unless it's specified as gross profit margin in which case it's gross profit divided by sales.

To get net profit margin, just take net profit divided by revenue. Net profit is $206,700 - $52,200 - $47,110 - $1,020 - $27,000 = $79,370. Divide that by $206,700 and your profit margin is 38.4%.

However your ending stockholders' equity increased by less than $79,370 from the opening stockholders' equity, so I'm not sure if dividends of $29,370 were declared, but in any case that doesn't affect the profit margin.