A Basic Condition That Determines a Firm's Profits Is

question 58

Multiple Choice

A basic condition that determines a firm's profits is:

• A) the firm's costs of distribution.
• B) taxes.
• C) the amount of value customers place on the firm's goods.
• D) government regulations.
• E) variable costs

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Definitions:

Net Operating Income

The net profit of a business is calculated by deducting operating expenses from the gross profit and before accounting for interest and taxes.

Sales Volume

The number of units sold within a reporting period, used as a measure of business activity.

Margin of Safety

The difference between actual sales and the break-even point, indicating how much sales can drop before a company incurs a loss.

Break-even Sales

The instance at which all costs are balanced by all revenues, resulting in neither gain nor loss.