The ratio that gives the best indication of how effectively a business is earning a profit from its normal business operations is the
A) debt ratio.
B) rate of return on sales.
C) gross margin.
D) operating margin.

Question

Quizplus · Accepted Answer

The operating margin is the best indicator among the options given for how effectively a business is earning a profit from its normal operations. It measures the percentage of revenue that remains after paying for variable costs of production such as wages and raw materials, thus reflecting the efficiency of a company in its core business activities.

The Ratio That Gives the Best Indication of How Effectively