Recall the Application About the Size of Wal-Mart to Answer

question 93

Multiple Choice

Recall the Application about the size of Wal-Mart to answer the following question(s) . During 2014, Wal-Mart's sales were approximately $473 billion, or roughly 2.7 percent of U.S. GDP, and its cost of sales was $358 billion.
-According to this Application, why is the value of Wal-Mart's 2014 sales NOT an accurate measurement of its actual sales impact on the U.S. economy?

• A) The sales figure did not account for chain-weighted inflation measurements.
• B) The sales figure includes the value of purchases from other firms.
• C) The sales figure did not take into account the recession of 2008.
• D) The sales figure was in nominal, not real, dollars.

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Definitions:

Contribution Margin Ratio

A metric that reveals the percentage of sales revenue that exceeds variable costs and contributes to covering fixed costs and generating profit.

Margin of Safety

Represents the extent to which sales can drop before a business reaches its break-even point.

Units

Units refer to the individual items or quantities that are produced, sold, or held in inventory.

Degree of Operating Leverage

A financial metric that measures the sensitivity of a company's operating income to its sales volume, indicating how a change in sales affects profits.