While a Retailer's Overall Gross Margin Is High,its Net Profit

question 22

True/False

While a retailer's overall gross margin is high,its net profit margin is low.This indicates that the retailer should reevaluate its use of markdowns.

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Definitions:

Separate Entity Assumption

An accounting principle that treats a company as an independent entity separate from its owners for reporting purposes.

Noncurrent Asset

A noncurrent asset is a long-term investment or property that a company does not expect to convert into cash within one year.

Investing Cash Flow

Investing cash flow refers to the cash inflows and outflows associated with the purchase and sale of long-term investments and capital assets.

Current Ratio

A liquidity ratio that measures a company's capacity to pay off its short-term liabilities with its short-term assets.