Which One of the Following Will Increase the Profit Margin

question 6

Multiple Choice

Which one of the following will increase the profit margin of a firm, all else held constant?

• A)Increase in interest paid
• B)Increase in fixed costs
• C)Increase in depreciation expense
• D)Decrease in the tax rate
• E)Decrease in sales

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Definitions:

Convertible Debt

A type of bond or loan that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the debt holder.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time, usually expressed as an annual percentage of the principal.

Debt Financing

The process of raising capital through borrowing, typically through loans or by issuing bonds.

Comprehensive Income

The change in equity of a company during a period from transactions and other events not involving the company’s shareholders directly, including all revenues, expenses, gains, and losses.