Net profit margin

Steps:

• Recognize profit for the year ($3,500) as net profit.
• Use revenue ($20,000) as the base for margin calculation.
• Apply formula: net profit margin = (net profit / revenue) × 100%.
• Result: ($3,500 /$20,000) × 100% = 12.5%.

Why A is correct:

• Net profit margin formula defines profit as percentage of revenue, yielding 12.5% directly from given figures.

Why the others are wrong:

• B: 28% overstates; confuses net with gross profit ratio (≈29%, but incorrect base).
• C: 0% ignores positive net profit value.
• D: 42% misapplies; resembles expenses/revenue ratio (8,400/20,000=42%), not profit.

Final answer: A