Which of the following statements about a high net profit margin is FALSE?
A)It demonstrates how effective your business is at converting sales into profit.
B)It may mean that you are capitalizing on some competitive advantage that can provide your business with extra capacity and flexibility during the hard times.
C)It may mean that you are keeping your operating expenses under control to leave an acceptable profit.
D)It may mean that your business might need to take on debt to pay its expenses.

Question

Quizplus · Accepted Answer

A high net profit margin means that the business is earning a significant profit in relation to its revenue. Options A, B, and C correctly explain the benefits of a high net profit margin. However, option D is false - a high net profit margin should provide the business with enough funds to cover its expenses without needing to take on additional debt.

Which of the Following Statements About a High Net Profit