Profit Margin Is Calculated by Dividing

question 181

Multiple Choice

Profit margin is calculated by dividing

• A) sales by cost of goods sold.
• B) gross profit by net sales.
• C) net income by stockholders' equity.
• D) net income by net sales.

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Definitions:

Capital Investment Proposals

Suggestions for strategic investments in long-term assets, projects, or ventures aimed at enhancing a company's growth and profitability.

Fixed Asset

Long-term tangible property that a firm owns and uses in its operations to generate income, not expected to be consumed or converted into cash in the short term.

Useful Life

An estimate of the lifespan of an asset during which it is expected to remain productive or useful for the purposes it was acquired.

Residual Value

The estimated value that an asset is expected to have at the end of its useful life, after depreciation has been taken into account.