Asked by Shawntay Williams on May 31, 2024
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All of the following statements regarding profit margin are true except:
A) Profit margin reflects the percent of profit in each dollar of revenue.
B) Profit margin is also called return on sales.
C) Profit margin can be used to compare a firm's performance to its competitors.
D) Profit margin is calculated by dividing net income by net sales.
E) Profit margin is not a useful measure of a company's operating results.
Net Sales
The amount of sales revenue left after deducting sales returns, allowances, and discounts.
Profit Margin
A financial metric indicating the percentage of revenue that exceeds the cost of goods sold, showing how much profit a company makes on sales.
Net Income
The sum a company holds as profit once it has subtracted expenses and taxes from its aggregate revenue.
- Master the key concepts of accrual basis accounting, including the principles of recognizing revenue and matching expenses.
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Learning Objectives
- Master the key concepts of accrual basis accounting, including the principles of recognizing revenue and matching expenses.
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