Why Would a Company Calculate Its Operating Margin

question 99

Multiple Choice

Why would a company calculate its operating margin?

• A)to evaluate how well resources are being used to generate profits
• B)to determine how efficiently it is using resources to make and sell products
• C)to assess if it has the resources to meet the claims of short-term creditors
• D)to evaluate how efficiently managers are turning inventory over
• E)to monitor if managers are collecting revenue from customers

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Definitions:

Sales Territories

Defined geographic areas or customer groups for which individual sales representatives or sales teams are responsible.

Geographic Location

The specific physical location of a place on the Earth's surface.

Functional Groupings

The organization of objects, individuals, or data based on their characteristics or roles to achieve efficiency or categorization.

Business Activities

Operations, tasks, and work performed by a company to generate profits, including production, sales, and distribution among others.