Profit Margin Is Defined as Operating Income Divided by Sales

question 11

True/False

Profit margin is defined as operating income divided by sales.

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Definitions:

Residual Policy

A dividend policy where dividends are paid out from residual or leftover earnings after all productive investment opportunities are funded.

Compromise Policy

A policy approach that aims to find a middle ground or agreement between differing parties, especially in legislative or corporate settings.

Cash Dividend

A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders in the form of cash.

Growth Opportunities

Prospects or opportunities for a business or investment to expand, leading to increased profits.