Which of the Following Statements Is true Regarding Profit Margin

question 209

Multiple Choice

Which of the following statements is true regarding profit margin?

• A)Profit margin can be improved by decreasing the gross profit rate and/or controlling operating expenses and other costs.
• B)Profit margin does not vary across industries.
• C)Discount stores with high merchandise turnover generally have higher profit margins.
• D)If the profit margin has a higher value, this suggests favorable return on each dollar of sales.

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Definitions:

Commodity Prices

The market prices for raw materials or primary agricultural products that are traded on exchanges.

Exchange Rates

The value of one currency for the purpose of conversion to another, determining how much one currency is worth in terms of another.

Interest Rates

The cost of borrowing money or the return earned on an investment, usually expressed as a percentage.

Inflation

The rate at which the general level of prices for goods and services is rising, and, consequently, purchasing power is falling.