Which of the Following Statements About Net Profit Margin Is

question 41

Multiple Choice

Which of the following statements about net profit margin is not correct?

• A) If a company's net profit margin increases from 15% to 20% this would be considered an improvement in profitability.
• B) A company with a net profit margin of 10% is using 90% of each dollar of revenue to cover costs and expenses.
• C) Net profit margin indicates how much net income is earned for every dollar of revenue.
• D) A company with a net profit margin of 10% may be evaluated differently depending upon which industry it is in.

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Definitions:

Market Price

The present value at which a service or asset is available for purchase or sale.

Disclosure

A process where a company provides important financial information to its shareholders and the public, enhancing transparency.

Neutrality

In financial reporting, the principle that information must be unbiased and free from influence or manipulation.

Top Executives

Individuals holding senior management positions within a company, responsible for overseeing its operations and strategic direction.