An increase in operating expenses would have which of the following effects on a company's profit margin?
A) Net profit margin would increase.
B) Net profit margin would decrease.
C) Net profit margin would remain unchanged.
D) There is not enough information given to determine the effect.

Question

Quizplus · Accepted Answer

An increase in operating expenses would decrease a company's profit margin because expenses are subtracted from revenue to calculate profit. As expenses increase, profit decreases, which lowers the profit margin.

An Increase in Operating Expenses Would Have Which of the Following