All of the Following Statements Regarding Profit Margin Are True

question 65

Multiple Choice

All of the following statements regarding profit margin are true except:

• A) Profit margin is not a useful measure of a company's operating results.
• B) Profit margin is also called return on sales.
• C) Profit margin can be used to compare a firm's performance to its competitors.
• D) Profit margin reflects the percent of profit in each dollar of revenue.
• E) Profit margin is calculated by dividing net income by net sales.

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Definitions:

Stock Repurchase

A situation where a company buys back its own shares from the marketplace, potentially increasing the value of remaining shares.

Stock Dividend

A dividend payment made in the form of additional shares rather than a cash payout.

Stock Split

An increase in a firm’s shares outstanding without any change in owner’s equity.