A component of operating efficiency and profitability, calculated by expressing net income as a percent of net sales, is the:
A) Acid-test ratio.
B) Merchandise turnover.
C) Price earnings ratio.
D) Accounts receivable turnover.
E) Profit margin ratio.

Question

Quizplus · Accepted Answer

The profit margin ratio, also known as net profit margin, is calculated by dividing net income by net sales and expressing it as a percentage. This ratio measures the company's ability to generate profits from its sales, which is important for assessing its operating efficiency and profitability.

A Component of Operating Efficiency and Profitability, Calculated by Expressing