A Firm's Profit Margin, or Return on Sales, Is Computed

question 9

Multiple Choice

A firm's profit margin, or return on sales, is computed by dividing ________.

• A) net income by net sales
• B) gross profit by net sales
• C) net income by gross profit
• D) net income by cost of sales
• E) operating income by gross profit

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Definitions:

Presentment Warranties

Guarantees made by the presenter of an instrument (e.g., a check) regarding their authority and the validity of the instrument in a financial transaction.

Acceptor

A person (drawee) who accepts and signs a draft to agree to pay the draft when it is presented.

Draft

An instrument validating an order by a drawer to a drawee to pay a payee.

Imposter Rule

A legal principle concerning negotiable instruments which states that if an impostor induces a payor to issue a check made payable to the impostor, the drawer is liable for the amount to a holder in due course.