Which metric shows the portion of net income remaining after taxes relative to sales?

• A. Ratio Analysis
• B. Current Ratio
• C. Net Profit on Sales Ratio
• D. Debt Ratio

Answer: (C)

Profitability per dollar of sales after taxes is captured by the net profit margin. The metric described is net profit on sales ratio, which equals net income after taxes divided by net sales, showing how much profit remains from each dollar of sales after taxes. For example, if after-tax income is 50,000 and sales are 500,000, the ratio is 10%. This focuses specifically on how efficiently sales are converted into profit after taxes. The other options don’t fit: ratio analysis is a broad set of measures, the current ratio assesses liquidity, and the debt ratio measures leverage.