What does a company’s annual net income of $345,678 on revenues of $3,210,987 indicate about the percentage of 11%?

The percentage of 11% derived from the company's annual net income of $345,678 on revenues of $3,210,987 indicates the profit margin, which is a key measure of profitability. The profit margin expresses the net income as a percentage of total revenues, illustrating how much profit is made for each dollar of revenue generated. To calculate the profit margin, the formula used is:

Profit Margin = (Net Income / Revenue) x 100

Substituting in the provided figures:

Profit Margin = ($345,678 / $3,210,987) x 100 ≈ 11%

This shows that the company retains approximately 11 cents of profit for every dollar of revenue after accounting for all expenses. A higher profit margin typically reflects effective cost management and a greater ability to generate profit from sales, making this indicator essential for evaluating a company's financial performance and operational efficiency.

The other options do not relate directly to the percentage calculated from net income and revenue, as the debt ratio, equity ratio, and return on assets pertain to different financial metrics and analyses, emphasizing aspects such as a company's leverage, ownership structure, and asset utilization, rather than strictly profitability through sales.