A Firm's Profit Margin, or Return on Sales, Is Computed

question 67

True/False

A firm's profit margin, or return on sales, is computed by dividing net income by net sales.

---

Definitions:

Capital Acquisitions Ratio

A financial metric used to determine the total capital being used for capital expenditures by a company.

Operating Activities

Activities that relate directly to the business's primary operations, including cash flows from selling goods and providing services, which are part of the company's core business function.

External Financing

Funds raised from outside the company, including loans, equity investments, and bonds, to finance its operations or growth.

Financing Activities

Transactions involving long-term liabilities and equity of a company, including issuing debt, repurchasing shares, and paying dividends.