A Company Sells Its Product for $100

question 61

Multiple Choice

A company sells its product for $100. The cost of the product to the company is $60. Selling expenses are $15. Cost of goods sold is:

• A)$100.
• B)$60.
• C)$40.
• D)$75.

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Definitions:

Gross Margin Ratio

A financial metric that measures a company's financial health by dividing its gross profit by net sales, indicating the percentage of sales revenue remaining after deducting the cost of goods sold.

Profitability

The ability of a business to generate earnings compared to its expenses and other costs incurred during a specific period.

Operating Cycle

The duration of time it takes for a company to buy inventory, sell it as finished goods, and collect cash from the sales.