Which of the Following Statements About the Profit Margin Is

question 10

Multiple Choice

Which of the following statements about the profit margin is NOT true?

• A) The profit margin indicates the percentage of sales revenue that ends up as profit.
• B) If gross margin increases, the profit margin must increase.
• C) If the asset turnover ratio remains constant and the profit margin increases, return on assets must have increased.
• D) If the sales price decreases and expenses stay consistent, the profit margin will decrease.

---

Definitions:

Government's Ability

The capacity of a government to implement policies, provide public services, and enforce laws effectively.

Future Services

An obligation or arrangement to provide services at a later date, often related to prepaid contracts or deferred revenue.

PSA Handbook

Stands for the Public Sector Accounting Handbook, which contains the accounting standards and guidelines for public sector entities in Canada.

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and the regulatory authorities.