Another manager at AB Distributor,Shawna,suggests that if the company's revenue had not increased,it would not have been able to increase its profits.Which of the following points out a flaw in Shawna's reasoning?
A) Other similar companies have increased their profits, too.
B) Revenue is not always relevant to figuring profitability.
C) Profitability is not the only objective of the company.
D) The company can increase revenue only by cutting costs.
E) It is possible to increase profits by lowering costs.

Question

Quizplus · Accepted Answer

E)Profitability is revenue minus costs, so there are two ways of increasing profits:increasing revenue or lowering costs. Choice A is an issue that is not directly relevant to how AB Distributors can increase its profits. Choice B is incorrect because revenue is always relevant to figuring profitability. Choice C is not relevant to whether or how the company can increase its profits. Choice D is not necessarily true, and if it were true it would support Shawna's contention that increasing revenue was necessary to increase its profits.

Another Manager at AB Distributor,Shawna,suggests That If the Company's Revenue