Which Statement Concerning the Gross Profit Ratio Is Not True

question 29

Multiple Choice

Which statement concerning the gross profit ratio is not true?

• A) A decline in the ratio represents an unfavourable trend.
• B) It is calculated as gross profit divided by net sales.
• C) It can be compared with ratios for similar businesses.
• D) A decline in the ratio can be caused by decreases in the cost of sales.

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Definitions:

Inelastic Demand

A situation where the demand for a product does not significantly change with a change in its price.

Elastic Supply

A situation where the quantity supplied of a good changes significantly as the price changes.

Tax Burden

The total amount of tax that individuals, businesses, or other entities must pay to authorities, often expressed as a percentage of income or revenue.

Inelastic Demand

A situation where the demand for a good or service is not significantly changed by changes in price.