Which of the following statements about the profit margin is NOT true?
A) The profit margin indicates the percentage of sales revenue that ends up as profit.
B) If gross margin increases, the profit margin must increase.
C) If the asset turnover ratio remains constant and the profit margin increases, return on assets must have increased.
D) If the sales price decreases and expenses stay consistent, the profit margin will decrease.

Question

Quizplus · Accepted Answer

While gross margin is a component of profit margin, it is not the only factor that determines it. Other factors such as operating expenses and taxes also affect profit margin.

Which of the Following Statements About the Profit Margin Is