Which of the Following Describes the Profit Margin Ratio

question 65

Multiple Choice

Which of the following describes the profit margin ratio?

• A)Average total assets divided by net income
• B)Net income plus income tax expense divided by average total assets
• C)Average total assets divided by net revenue
• D)Net income divided by net revenue

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Definitions:

Retail Method

An accounting method used to estimate inventory value by applying a cost-to-retail price ratio, based on the beginning inventory plus purchases, less the sales at retail.

Inventory Costing

The method used to value and account for inventory, including costs of purchase, production, and conversion.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated after considering the cost of goods sold and any new purchases.

Inventory Management

The process of ordering, storing, using, and selling a company's inventory. This includes the management of raw materials, components, and finished products, as well as warehousing and processing such items.