Which of the Following Describes the Profit Margin Ratio

question 65

Multiple Choice

Which of the following describes the profit margin ratio?

• A)Average total assets divided by net income
• B)Net income plus income tax expense divided by average total assets
• C)Average total assets divided by net revenue
• D)Net income divided by net revenue

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Definitions:

Equity Method

An accounting method used to record investments in other companies, where the investment's value is adjusted based on the investor's share of the investee's profit or loss.

Common Stock

A type of equity ownership in a corporation, representing a claim on part of the company's assets and earnings.

Significant Influence

The power to participate in the financial and operating policy decisions of another entity without controlling it.

Carrying Amount

The value of an asset as shown in the business’s accounts, reflecting its cost minus any depreciation or impairment charges.