Answer :
Given:
Net sales = $400000
Cost of goods sold = $200,000
Operating expenses = $100,000
Interest expenses = $50,000
To find:
The operating profit margin
Solution:
To calculate the operating profit margin, first we have to find the operating profit.
Subtract your total operating expenses from gross profit to calculate operating profit.
That is, [tex]\text{Operating profit}=\text{Sales (Revenue) - Cost of goods sold - Operating expenses}[/tex][tex]\Rightarrow \$400000-\$200000-\$100000=\$100000[/tex]
Divide operating profit by gross revenue to calculate operating profit margin.
[tex]\text{Operating profit margin} = \frac{\text{Operating profit}}{\text{Gross Revenue}}\times100[/tex]
[tex]\Rightarrow\frac{100000}{400000}\times100=25\%[/tex]
Therefore, the Operating profit margin is 25%.