Widget Has a Higher EBIT/Revenue but Lower Net Operating Profit

question 33

Multiple Choice

Widget has a higher EBIT/Revenue but lower net operating profit margin than Tool. Which of the following statements could explain this? As a percentage of sales:

• A) Widget has greater interest expense and taxes
• B) Widget has greater interest expense but lower taxes
• C) Widget has lower interest expense but higher taxes
• D) Widget has lower interest expense and taxes

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Definitions:

Free Contractual Nature

Describes the principle that parties are free to negotiate and enter into contracts without undue interference or restrictions.

Common Law

A legal system based on precedents and judicial decisions rather than statutory laws, originating in England and used in many countries.

Lawful Picketing

Lawful picketing refers to legally protected protest activity by workers outside of a workplace to publicize a dispute, typically regarding labor issues, without breaching peace or law.

Picket Line

A boundary established by workers on strike, especially at the entrance to the place of work, to demonstrate and discourage others from entering the premises.