A company increases sales revenue.Total assets and net income are unchanged.The company's net profit margin ratio:
A)and asset turnover ratio both rise.
B)rises and its asset turnover ratio falls.
C)and asset turnover ratio both fall.
D)falls and its asset turnover ratio rises.

Question

Quizplus · Accepted Answer

The net profit margin ratio falls because net income is unchanged while sales revenue increases. The asset turnover ratio rises because sales revenue increases while total assets remain unchanged.

A Company Increases Sales Revenue