Which of the Following Statements Is True

question 57

Multiple Choice

Which of the following statements is true?

• A) A gross profit ratio that is declining over time indicates a reduction in the margin between the purchase price and the selling price of goods.
• B) An expense to sales ratio of 20% in year 1 and 22% in year 2 indicates that management policies to control expenses are succeeding.
• C) Generally speaking the slower the turnover of inventory the greater the profitability of the business.
• D) The formula for the inventory turnover ratio is sales divided by average inventory.

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Definitions:

Free Trade

An economic policy that allows imports and exports between countries with minimal governmental restrictions or duties.

Domestic Price

The cost of products or services within the confines of a nation, in contrast to prices on the international or overseas market.

Imported Shoes

Footwear that is brought into a country from another to be sold, often reflecting the global trade dynamics and consumer preferences.

Domestic Production

The total value of all goods and services produced within a country's borders in a given time period.