Firms Should Compare Their Gross, Operating and Net Profit Margins

question 68

Multiple Choice

Firms should compare their gross, operating and net profit margins to past years and other companies in order to

• A) evaluate the firm's performance.
• B) identify expenses that seem to be out-of-line
• C) better manage the reporting of the firm's earnings.
• D) Both A and B.

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Definitions:

Performance Measure

Quantitative or qualitative criteria used to evaluate, compare, and track the efficiency, effectiveness, or performance of an organization, employee, or process.

Utilization Rate

The ratio of the time that a resource is actually used to the total time it is available for use, often used in assessing the efficiency of production resources or employees.

Machinery

Equipment or devices designed for a specific task, often used in manufacturing and industrial processes.

Sustainability Reports

These are reports published by companies regarding their environmental impact, social contributions, and governance practices, focusing on their sustainability performance and objectives.