If the rate of growth in sales is greater than the rate of growth in cost of goods sold from one year to the next, which of the following will you most likely expect?
A)The gross margin percentage is increasing.
B)The gross margin percentage is decreasing.
C)Accounts receivable turnover is declining.
D)Inventory turnover is declining.

Question

Quizplus · Accepted Answer

If the rate of growth in sales is greater than the rate of growth in cost of goods sold, it means that the company is generating more revenue per dollar of cost, indicating higher profitability. This would result in an increasing gross margin percentage.

If the Rate of Growth in Sales Is Greater Than