The net profit margin is a pure income statement ratio, meaning it will be unaffected by the application of the current rate method. The calculation is shown below:
Under the current rate method, all income statement accounts will be translated at the average rate.
|
Revenue |
7,400,000 |
$0.37 |
$2,738,000 |
|
Cost of Goods Sold (COGS) |
(5,200,000) |
$0.37 |
(1,924,000) |
|
Depreciation |
(1,200,000) |
$0.37 |
(444,000) |
|
Taxes |
(250,000) |
$0.37 |
(92,500) |
|
Net Income |
750,000 |
$0.37 |
$277,500 |
Note that under the current rate method, since all income statement accounts are translated at the same average rate, you do not have to translate the income statement to get the correct answer. (750,000 / 7,400,000) = 10.1% |
