The % Change in Profits Can Be Calculated by

question 103

True/False

The % change in profits can be calculated by % change in margin of safety multiplied by degree of operating leverage.

---

Definitions:

Credit Sales

Sales made on credit, allowing buyers to pay at a later date, usually generating accounts receivable for the seller.

Discount Period

The time frame between the date of the sale and the due date when a discount is available for payment of an invoice.

Merchandise Return

A process in which customers return purchased goods to the seller due to defects, dissatisfaction, or other reasons.

Sales Returns

Transactions in which customers return goods previously purchased and receive a refund or credit.