Which Ratios Are the Most Commonly Analyzed from the Income

question 11

Multiple Choice

Which ratios are the most commonly analyzed from the income statement?

• A) gross profit margin
• B) net profit margin
• C) operating profit margin
• D) all of these

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Definitions:

Inventory Costing

The approach employed for inventory valuation, incorporating methods such as FIFO (First In, First Out), LIFO (Last In, First Out), and the weighted average cost technique.

Gross Profit

The difference between revenue and the cost of goods sold, indicating the basic profitability of a company's core business activities.

FIFO

FIFO, or "First-In, First-Out," is an inventory valuation method wherein the oldest inventory items are recorded as sold first.

Inventory Costing Methods

Various approaches to valuing inventory, including First-In, First-Out (FIFO); Last-In, First-Out (LIFO); and Weighted Average Cost.