Which of the following statements about a high net proﬁt margin is FALSE?
A) It demonstrates how effective your business is at converting sales into proﬁt.
B) It may mean that you are capitalizing on some competitive advantage that can provide your business with extra capacity and ﬂexibility during the hard times.
C) It may mean that you are keeping your operating expenses under control to earn an acceptable proﬁt.
D) It may mean that your business might need to take on debt to pay its expenses.

Question

Quizplus · Accepted Answer

A high net profit margin indicates that a business is effectively converting sales into profit, capitalizing on competitive advantages, and controlling operating expenses well. It does not imply that a business needs to take on debt to pay its expenses; rather, it suggests the opposite, that the business is generating sufficient profit to cover its expenses and potentially more.

Which of the Following Statements About a High Net Proﬁt