Asked by Vincent Zhang on Apr 28, 2024
Verified
Which of the following statements is false?
A) Gross profit percentage is calculated as gross profit divided by net sales.
B) Gross profit percentage should only be viewed for each reporting company and is not useful in comparing different companies in the same industry.
C) Gross profit is calculated as net sales less cost of sales.
D) A higher gross profit might be strategic in order to afford high research and development costs.
Gross Profit Percentage
A financial metric expressed as a percentage that calculates the gross profit as a portion of net sales, indicating how efficiently a company uses its resources.
Research and Development
Activities undertaken by a company to innovate and introduce new products or services, or to improve their existing offerings.
- Discern principal financial ratios and the processes for their calculation in financial examinations.
Verified Answer
FW
Fatima WelchMay 01, 2024
Final Answer :
B
Explanation :
Gross profit percentage is a useful metric for comparing companies within the same industry, as it indicates how efficiently a company is producing and selling its products. It is calculated as gross profit divided by net sales. A higher gross profit can indicate a company's ability to invest in research and development or other strategic initiatives.
Learning Objectives
- Discern principal financial ratios and the processes for their calculation in financial examinations.