Two frequently cited ratios of profitability that can be read directly from the common-size income statement are ________.
A) the earnings per share and the return on total assets
B) the gross profit margin and the earnings per share
C) the gross profit margin and the return on total assets
D) the gross profit margin and the net profit margin

Question

Quizplus · Accepted Answer

The two ratios of profitability that can be read directly from the common-size income statement are the gross profit margin and the net profit margin. The gross profit margin measures the profitability of the company after deducting the cost of sales, while the net profit margin measures the profitability of the company after deducting all expenses, including taxes and interest.

Two Frequently Cited Ratios of Profitability That Can Be Read