Profitability Ratios Allow One to Measure the Ability of the Firm

question 51

True/False

Profitability ratios allow one to measure the ability of the firm to earn an adequate return on sales, total assets, and invested capital.

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Definitions:

Freight-in

The cost of shipping goods to the buyer's location, which is often included in the inventory cost.

Supplies Expense

The cost associated with the consumption of supplies utilized during an accounting period in the operation of a business.

Sales Discounts

A reduction in the price of a product or service provided by the seller to the buyer, often used as an incentive to encourage prompt payment or to increase sales volume.

Net Sales

The revenue from sales transactions after deductions of returns, allowances for damaged or missing goods, and discounts.