An Analyst Gathered the Following Information About the Net Profit

question 34

Multiple Choice

An analyst gathered the following information about the net profit margins of companies in two industries: Compared with the other industry,the relative dispersion of net profit margins is smaller for Industry:

• A)B,because it has a smaller mean deviation.
• B)B,because it has a smaller range of variation.
• C)A,because it has a smaller standard deviation.
• D)A,because it has a smaller coefficient of variation.

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Definitions:

Gross Profit Method

A technique used for estimating inventory and cost of goods sold, calculated by applying a gross profit percentage to sales.

Retail Inventory Method

An accounting method used by retailers to estimate inventory value by converting retail prices to cost prices.

Perpetual Inventory

A system of accounting for inventory that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.