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Asked by Annika Hogstrom on May 25, 2024

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The ratio of income from operations to sales, which is also a factor in the DuPont formula for determining the return on investment, is called

A) profit margin
B) indirect expenses
C) investment turnover
D) cost

DuPont Formula

A formula that breaks down Return on Equity into three parts: profitability, operating efficiency, and financial leverage, to analyze a company's financial health.

Profit Margin

A profitability ratio calculated as net income divided by revenue, showing the percentage of profit made from sales.

Income From Operations

The profit realized from a business's operational activities, calculated before taxes and interest are deducted.

  • Analyze and understand the net profit margin for branches or organizations.
  • Understand the role of income from operations in financial analysis.
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AG
Antoine GaudinMay 30, 2024
Final Answer :
A
Explanation :
The ratio of income from operations to sales is commonly referred to as the profit margin, which is used to determine the profitability of an organization in terms of its operating income. It is one of the components of the DuPont formula used to calculate the return on investment. The other options, indirect expenses, investment turnover, and cost, do not directly encompass this ratio.

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