Net Profit Margin Is What Type of Financial Ratio

question 102

Multiple Choice

Net profit margin is what type of financial ratio?

• A) liquidity ratio
• B) profitability ratio
• C) activity ratio
• D) leverage ratio
• E) revenue ratio

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Definitions:

Differential Cost

The difference in cost between two alternative decisions or changes in output levels.

Direct Cost

Expenses that can be directly traced to producing specific goods or services, such as raw materials and direct labor.

Indirect Cost

Costs not directly traceable to a specific product or project, such as utilities or rent.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much contributes to covering fixed costs and generating profits.