Company a Has a Profit Margin on Sales Ratio of 8

question 37

Multiple Choice

Company A has a profit margin on sales ratio of 8% and Company B has a profit margin on sales ratio of 12%.Which of the following must be true?

• A)Company A must charge less for its goods than Company B.
• B)Company A must have a lower gross profit margin than Company B.
• C)Company A must make less per dollar of sales than Company B.
• D)Company A must charge more for its goods than Company B.

---

Definitions:

Shares

Units of ownership interest or equity in a corporation or financial asset.

Retained Earnings

The portion of a company's profits that is held or retained for reinvestment in the business, rather than being paid out as dividends.

Common Stock

Equity securities that represent ownership in a corporation, providing voting rights and a share in the company's profits through dividends.

Treasury

Refers to the department within a government or organization that is responsible for managing the institution's revenue, spending, and debt.