The Profit Margin Ratio ________

question 138

Multiple Choice

The profit margin ratio ________.

• A) focuses on the liquidity of the business
• B) is computed by dividing net sales by net income
• C) shows how much gross profit a business earns on every $1.00 of sales
• D) is often compared to the industry average

---

Definitions:

Random Variable

A variable whose possible values are numerical outcomes of a random phenomenon.

Future Value

The value of an investment at a specific future date, taking into account factors like interest rates and compound interest.

Deductibles

The amount a policyholder must pay out-of-pocket before an insurance company will cover the remaining costs of a claim.

Moral Hazard

A situation where one party is more likely to take risks because the negative consequences of the risk are borne by another party.