What Would Happen to the Net Profit Margin Ratio If

question 33

Multiple Choice

What would happen to the net profit margin ratio if the company recorded depreciation at the end of 2015 for depreciation of $500 on one of its assets?

• A)Net profit margin would increase indicating an improvement in performance.
• B)Net profit margin would decrease indicating less control over expenses.
• C)Net profit margin would not change.
• D)Net profit margin would have decreased in 2015 without this journal entry.

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Definitions:

Fixed Assets

Tangible assets purchased for long-term use in the operation of a business, not expected to be converted quickly into cash.

Long-term Debt

Financial obligations of a company payable over a period exceeding twelve months, often used for major investments or acquisitions.

Short-term Debt

Financial obligations that are due for repayment within one year, often used to finance immediate operational needs.

Provincial Tax Rates

The percentage of tax levied by provincial or state governments on income, property, and purchases within their jurisdiction.