Which of the Following Provides the best Rationale Regarding Analysts

question 61

Multiple Choice

Which of the following provides the best rationale regarding analysts' views about the information value of the gross profit rate versus the gross profit amount?

• A)The gross profit amount is more informative than the gross profit rate because it is a dollar amount rather than a ratio.
• B)The gross profit amount is less informative than the gross profit rate because the latter presents a meaningful relationship between gross profit and net sales.
• C)The gross profit amount is more informative than the gross profit rate because the gross profit rate is only used to describe a few industries while the gross profit amount is universally used.
• D)The gross profit amount is more informative than the gross profit rate because high volume operations are able to calculate the gross profit rate but not the gross profit amount.

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Definitions:

Aggregate Demand

Total pull for goods and services in an economy, measured at a specific wide price level during a prescribed time scope.

Economic Boom

A period characterized by significant expansion in the economy, marked by increased production and consumption, lower unemployment rates, and robust economic growth.

Government Expenditures

Represents the total spending by the government on goods, services, and public works.

Money Supply

The entire pool of monetary assets at a specific point in an economy's timeline.