If Sales Decrease and Financial Leverage Increases, We Can Say

question 70

True/False

If sales decrease and financial leverage increases, we can say with certainty that the profit margin on sales will decrease.

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Definitions:

Net Income

Profit remaining after all expenses, taxes, and deductions have been subtracted from total revenue.

Accounts Receivable

Accounts receivable are the amounts owed to a company by its customers for goods or services delivered but not yet paid for.

Net Sales

Revenue from sales transactions after deducting returns, allowances for damaged or missing goods, and discounts.

Working Capital Ratio

A financial metric that measures a company's ability to pay off its short-term liabilities with its short-term assets, indicating liquidity.