If Net Sales Is Growing at a Greater Rate Than

question 11

Multiple Choice

If net sales is growing at a greater rate than cost of goods sold,which of the following will always be true?

• A)The gross margin ratio will decrease.
• B)The gross margin ratio will increase.
• C)Net income will increase.
• D)Net income will decrease.
• E)None of the answer choices is correct.

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Definitions:

Interest-Rate Cost

The expense incurred from borrowing money, essentially the price paid for the use of borrowed funds, or, for investors, the returns from lending.

R&D Expenditure

R&D Expenditure refers to the funds allocated by firms or governments towards research and development to foster innovation and growth.

Scientific Characteristics

The inherent or distinctive attributes and features of scientific inquiry and methodology, such as objectivity, empirical evidence, and systematic experimentation.

Industry Structure

The composition and characteristics of firms in a particular market, determining the nature of competition and pricing strategies.