When Benchmarking Financial Statements of Two Key Competitors, the Gross

question 112

Multiple Choice

When benchmarking financial statements of two key competitors, the gross margin of Company A is expressed as a percentage of:

• A) the total gross margins of Companies A and B.
• B) Company B's gross margin.
• C) a common standard for both Company A and Company B.
• D) Company A's sales.

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Definitions:

Accounts Payable Period

The average number of days it takes for a business to pay off its trade creditors.

Credit

Refers to the trust allowing one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately but promises either to repay or return those resources at a later date.

Supplier

A person or organization that provides goods or services to another entity, typically as part of a supply chain.

Cash

Currency and other liquid instruments in a financial system or on a company's balance sheet used for transactions or settling debts.