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The Fairway health plan is a for-profit health plan that issues stock. The following data was taken from Fairway's financial statements:
Current assets.....$5,000,000
Total assets.....6,000,000
Current liabilities.....2,500,000
Total liabilities.....3,600,000
Stockholders' equity.....2,400,000
Fairway's total revenues for the previous financial period were $7,200,000, and its net income for that period was $180,000.
For the previous financial period, Fairway's net profit margin was
Suggested Answer: A
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12 comments · newest first
CA
Carlota
2 months ago
I feel like it’s option C, 3.60%. The numbers seem to fit better.
VE
Velda
3 months ago
Agreed! I’m leaning towards option B, 3.00%.
SH
Shawn
3 months ago
I think the question is tricky. Net profit margin calculations can be confusing.
TA
Tammi
3 months ago
I’m with Tuyet on this one!
KA
Karl
3 months ago
Wait, are we sure about those numbers? Seems off.
EM
Emilio
3 months ago
Definitely not 7.50%, that's way too high!
TU
Tuyet
3 months ago
I think it’s 2.50%.
PE
Pearlene
4 months ago
Net profit margin is calculated as net income divided by total revenues.
YO
Yolando
4 months ago
I’m a bit lost on the percentages. Did we use the same total revenues for all calculations?
AL
Alison
4 months ago
I practiced a similar question last week, and I think the answer was around 3%.
JA
Jacinta
4 months ago
I think the net profit margin is net income divided by total revenues, so it should be straightforward.
ME
Mel
4 months ago
I remember we calculated net profit margin in class, but I’m not sure if I got the formula right.