Which of the Following Statements Regarding the Net Profit Margin

question 59

Multiple Choice

Which of the following statements regarding the net profit margin ratio is false?

• A)The numerator is net income.
• B)The denominator is net sales or operating revenues.
• C)It measures how much of every sales dollar is gross profit.
• D)Financial analysts expect well-run businesses to maintain or improve their profit margin over time.

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Definitions:

Ultimatum Game

A game in experimental economics where a proposer is given a sum of money to split with a responder; if the responder rejects the offer, both players get nothing, highlighting negotiation and fairness perceptions.

Invisible Hand

A metaphor introduced by Adam Smith to describe the self-regulating nature of the marketplace, where individuals' pursuit of self-interest inadvertently benefits society at large.

Neoclassical Economists

Economists dedicated to analyzing how goods, outputs, and distribution of income in markets are dictated by supply and demand forces.

Ultimatum Game

A game in economic experiments where one player proposes how to divide a sum of money with another player who can accept or reject the proposal.