The Determining Factor of Whether an Expense Is Specific or General

question 79

Multiple Choice

The determining factor of whether an expense is specific or general is:

• A) Whether it can be linked to a particular product
• B) Whether it is categorized as part of cost of goods sold or part of general and administrative expenses
• C) Whether the company used the full-cost or contribution-margin approach
• D) The object of measurement being used
• E) Whether the focus of the analysis is on the net profit or net expenses

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Definitions:

Sustainable Rate Of Growth

The maximum rate at which a company can grow its revenues without needing to obtain additional financing.

Profit Margin

A financial metric indicating the percentage of revenue that exceeds the costs of goods sold, representing the proportion of sales that turns into profit.

Dividend Payout Ratio

The percentage of earnings paid to shareholders in dividends, calculated by dividing the total dividends by the net income for the same period.