Briefly Discuss What Gross Profit Represents and How It Affects

question 205

Essay

Briefly discuss what gross profit represents and how it affects the net earnings of a merchandiser.

---

Definitions:

Decision Making

is the process of selecting a course of action from multiple alternatives to achieve a specific objective.

Liabilities

Financial obligations or debts that a company owes to outside parties, including loans, accounts payable, mortgages, and accrued expenses.

Stockholders' Equity

The equity capital that is contributed by shareholders plus the retained earnings of the company. It represents the residual value of assets after liabilities have been settled.

Creditors' Risk

The risk that debtors will default on their obligations, resulting in financial loss for creditors.