The Gross Margin Ratio

question 158

Multiple Choice

The gross margin ratio:

• A) Is also called the net profit ratio.
• B) Measures a merchandising firm's ability to earn a profit from the sale of inventory.
• C) Is also called the profit margin.
• D) Is a measure of liquidity.
• E) Should be greater than 1.

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Definitions:

Factor of Production

Resources used in the creation of goods and services, which include land, labor, capital, and entrepreneurship.

Total Income

The full amount of income received by an individual or a country, including wages, salaries, benefits, and income from investments before any deductions.

Marginal Product

Marginal product is the addition to total output produced by using one more unit of a specific input, holding all other inputs constant.

Marginal Revenue

The change in total revenue generated by an additional unit of output.