The Gross Margin Ratio measures which of the following?
A)The profitability of the firm's debt.
B)The liquidity of the firm's profit.
C)The percent of each dollar of sales that can cover the firm's operating expenses.
D)The percent of the assets that generate profit for the firm and that covers operating and financing expenses.

Question

Quizplus · Accepted Answer

The Gross Margin Ratio is calculated by dividing the Gross Margin by the total revenue. The Gross Margin is the difference between revenue and cost of goods sold. Therefore, the Gross Margin Ratio indicates the percentage of each dollar of sales that can cover the firm's operating expenses. It is a measure of the profitability of each dollar of sales before deducting operating expenses.

The Gross Margin Ratio Measures Which of the Following