Use the following information to answer the given question

\(\begin{array}{c|c} & N \\ \hline Sales & 200,000 \\ \text{Opening Stock} & 20,000 \\ purchases & 140,000 \\ \text{Closing Stock} & 10,000 \\ Expenses & 10,000\\ Bank & 10,000 \\ Capital & 85,000 \\ Creditors & 35,000 \\ Debtors & 50,000 \\ \text{Fixtures and fittings, cost} & 10,000 \\ \text{Freehold land and building} & 70,000 \\ Drawings & 10,000\end{array}\)

Percentage of net profit to sales is

  • A 40%
  • B 30%
  • C 20%
  • D 10%
waec 2001accounting

The correct answer is C. 20%

The percentage of net profit to sales, also known as the net profit margin, is calculated as follows:

  1. Calculate the Cost of Goods Sold (COGS) = Opening Stock + Purchases - Closing Stock = 20,000 + 140,000 - 10,000 = 150,000

  2. Gross Profit = Sales - COGS = 200,000 - 150,000 = 50,000

  3. Net Profit = Gross Profit - Expenses = 50,000 - 10,000 = 40,000

  4. Percentage of Net Profit to Sales = (Net Profit / Sales) * 100% = (40,000 / 200,000) * 100% = 20%

So, the correct answer is C. 20%. 

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