The Contribution Margin Ratio Is Calculated as Follows

question 19

Multiple Choice

The contribution margin ratio is calculated as follows:

• A) total contribution margin / total sales revenue
• B) total profit / sales revenue
• C) contribution margin per unit / selling price per unit
• D) total contribution margin / total sales revenue AND contribution margin per unit / selling price per unit

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Definitions:

Capital Structure Weights

Refers to the proportionate relationship between different types of financing (equity, debt, etc.) used by a company to fund its operations and growth.

Weighted Average Cost of Capital

The expected average yield that a company aims to deliver to its security investors for the purpose of funding its assets.

Debt-Equity Ratio

A proportion indicator of how a company leverages debt and equity to finance its asset base.

Market Values

The market's going price for acquiring or selling a service or asset now.