A Shift in the Sales Mix from High-Margin Items to Low-Margin

question 157

True/False

A shift in the sales mix from high-margin items to low-margin items can cause total profits to decrease even though total sales may increase.

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Definitions:

Price-Earnings Ratio

A valuation metric for stocks, calculated by dividing the market price per share by the earnings per share (EPS).

Investors' Expectations

The anticipations or beliefs that investors hold regarding future performance, earnings, and growth of a company or market.

Cost Basis of Accounting

An accounting method where expenses and income are recorded when they are incurred or earned, regardless of when the cash transactions occur.

Originally Acquired

Refers to the initial purchase or acquisition of an asset or security at its original purchase price.