The Difference Between Sales and _____ Is the Gross Profit

question 55

Multiple Choice

The difference between sales and _____ is the gross profit on sales revenue.

• A) fixed costs
• B) variable costs
• C) cost of goods sold
• D) total productive hours
• E) average annual expenses

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Definitions:

Return on Assets

Return on Assets (ROA) is a financial ratio that measures the profitability of a company relative to its total assets, indicating how efficient a company is at using its assets to generate profits.

Return on Inventory

A financial metric used to assess how effectively a company generates profits from its inventory investments.

Return on Stockholders' Equity

A financial ratio that measures the profitability of a corporation in relation to stockholders' equity, indicating how effectively equity is used to generate profits.

Asset Management Ratios

Those ratios—accounts receivable turnover, average collection period, inventory turnover, and asset turnover—which measure how effectively a company uses its assets.