If Management Informs Employees That Bonuses Will Depend Solely on Improving

question 119

Multiple Choice

If management informs employees that bonuses will depend solely on improving the gross profit ratio (gross profit/sales) , which of the following behaviors would most likely be observed?

• A)Sales people would quit trying to sell high volume, low margin core products
• B)Overall sales would fall
• C)Overall gross profit would fall
• D)All of these answer choices are correct

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Definitions:

Capital

Financial assets or the financial value of assets, such as funds held in deposit accounts and/or funds obtained from special financing sources.

Net Income

The total profit of a company after all expenses and taxes have been deducted from total revenue.

Income Statement

A financial report that displays a company's revenues, expenses, and profits over a specific period.

Balance Sheet

A document detailing a firm's assets, debts, and owner's equity at a certain point in time.