n NISM Certifications
XV NISM Series XV
Medium

M/s. XYZ Ltd. has reported sales of Rs 10,00,000, and its equity capital is Rs 4,00,000. If the return on equity (ROE) is 18%, determine the Net Profit Margin of the company.

Practice question from NISM XV Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    18%

  2. B

    12.78%

  3. 7.2%

    Correct answer

  4. D

    3.5%

Why this is the answer

Net Profit = 18% of 4,00,000 = 72,000. Net Profit Margin = 72,000 ÷ 10,00,000 = 7.2%.

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