If the owner of XYZ Company wishes to make $125,000 this year with a 30% profit margin, what would his sales need to be?

To determine the necessary sales for XYZ Company to achieve the desired income of $125,000 with a 30% profit margin, it’s essential to understand what a profit margin means in a sales context. A 30% profit margin indicates that 30% of the total sales revenue will be retained as profit after covering all expenses.

The formula for profit margin is:

[

\text{Profit} = \text{Sales} \times \text{Profit Margin}

]

Using the numbers provided:

[

125,000 = \text{Sales} \times 0.30

]

To find the necessary sales, rearranging the equation gives:

[

\text{Sales} = \frac{125,000}{0.30}

]

Calculating this provides:

[

\text{Sales} = \frac{125,000}{0.30} = 416,666.67

]

When rounded, this amount demonstrates that the sales needed to achieve the target income while maintaining a 30% profit margin is approximately $416,666. Thus, the answer is accurately identified as $416,666.

This understanding reflects that profit is derived from a fraction of the total revenue, highlighting the