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:

Legal Standard of Care

The extent of carefulness and precaution demanded from a person obligated to exercise a duty of care.

Acceptable Standard

A recognized level of quality or attainment that is considered satisfactory.

Skilled Professional

An individual with special training, knowledge, and ability in a particular area of expertise.

Prudent Person

A legal standard referring to the conduct of a hypothetical reasonable individual under specific circumstances.