It Is Possible for a Company to Be Profitable,yet Not

question 216

True/False

It is possible for a company to be profitable,yet not have enough cash to pay its bills.

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Definitions:

Variable Expense Ratio

The ratio of variable costs to total sales, indicating how variable expenses change with sales levels.

Contribution Format

A way of presenting an income statement where variable costs are deducted from sales to show contribution margin before fixed costs are subtracted to show net operating income.

Income Statement

An income statement is a financial document that summarizes a company's revenues, expenses, and profits over a specific period, showing its financial performance.

Selling Price

The amount charged to the customer for a product or service, determining the revenue generated from sales.