Which of the Following Statements About the Profit Margin Is

question 32

Multiple Choice

Which of the following statements about the profit margin is NOT true?

• A) The profit margin indicates the percentage of sales revenue that ends up as profit.
• B) The profit margin gives some indication of pricing strategy or competition intensity.
• C) A supermarket would be expected to have a high profit margin.
• D) The profit margin is a useful measure of performance.

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Definitions:

Accounting Relationships

The connections and correlations between different financial statements and accounts within a business's accounting system.

Capital Intensity Ratio

A measure of the amount of capital needed per dollar of revenue, indicating the level of investment required to sustain operations.

Fixed-Asset Utilization

Fixed-asset utilization is a measure of how efficiently a company is using its fixed assets, like plant, property, and equipment, to generate sales or revenue.

Internal Growth Rate

The maximum growth rate a company can achieve without needing to secure additional financing.