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 is the component of operating efficiency and profitability that measures the percentage of each dollar of sales that results in net income. It is calculated by dividing net income by net sales. The higher the profit margin ratio, the more efficient and profitable the company is.

A Component of Operating Efficiency and Profitability, Calculated by Expressing