Which of the Following Statements Regarding the Net Profit Margin

question 59

Multiple Choice

Which of the following statements regarding the net profit margin ratio is false?

• A)The numerator is net income.
• B)The denominator is net sales or operating revenues.
• C)It measures how much of every sales dollar is gross profit.
• D)Financial analysts expect well-run businesses to maintain or improve their profit margin over time.

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Definitions:

API GL-5

A classification of gear lubricant specified by the American Petroleum Institute, indicating it’s suitable for high-pressure conditions and hypoid gears, commonly used in automotive axles.

Alcohol Evaporator Canister

A component in an air brake system that removes moisture from the air lines using an alcohol-based solution to prevent freezing.

Compressor Pumping

The action of a compressor moving fluid or gas through a system, such as in refrigeration or HVAC systems.

Oil Drain Ports

Specifically designed openings in an engine or machinery used for the drainage of oil, facilitating regular maintenance and oil changes.