Wal-Mart Competes with Its Low Prices

question 121

Multiple Choice

Wal-Mart competes with its low prices. It is willing to make a tradeoff between ________.

• A) lower sales and greater relative margins
• B) greater sales and lower relative margins
• C) higher prices and lower cost merchandise
• D) lower prices and higher cost merchandise

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Definitions:

Gross Profit Rate

A financial metric that indicates the percentage of revenue that exceeds the cost of goods sold, reflecting a company's operational efficiency.

Accounts Receivable Turnover

A financial metric indicating how many times a company collects its average accounts receivable balance in a period.

Price-earnings Ratio

A valuation metric used to measure a company's current share price relative to its per-share earnings.

Acid-test Ratio

A financial metric that assesses a company's ability to pay off its short-term liabilities with its most liquid assets, excluding inventory.