Exhibit 13-1 Xavier Company reported the following income statement and balance sheet amounts on December 31, 2017.

	2017	2016
Net sales revenue (all credit)	$1,800,000
Cost of goods sold	1,040,000
Gross margin	760,000
Selling and general expenses	420,000
Interest expense	60,000
Net income	$ 280,000
Current assets	$ 100,000	$ 90,000
Long-term assets	830,000	800,000
Total assets	$930,000	$890,000
Current liabilities	$ 72,000	$ 56,000
Long-term liabilities	204,000	390,000
Common stockholders equity	654,000	444,000
Total liabilities and stockholders' equity	$930,000	$890,000

Inventory and prepaid expenses account for $50,000 of the 2017 current assets. Average inventory for 2017 is $36,000. Average net accounts receivable for 2017 is $62,000. Average one-day sales are $5,900. There are 12,000 shares of common stock outstanding at the end of 2017. The market price per share of common stock is $28 at the end of 2017. The EPS for 2017 is equal to $1.50 per share.

Refer to Exhibit 13-1. What is the gross margin ratio for 2017 (rounded to the nearest tenth of a percent)?

Group of answer choices

10.6%

63.5%

42.2%

38.8 %

None of the answer choices is correct.