Fundamental Accounting Principles Study Set 5
Quiz 5: Accounting for Merchandising Operations
The Gross Margin Ratio
The gross margin ratio: A) Is also called the net profit ratio. B) Measures a merchandising firm's ability to earn a profit from the sale of inventory. C) Is also called the profit margin. D) Is a measure of liquidity. E) Should be greater than 1.
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A company's gross profit was $83,750 and its net sales were $347,800. Its gross margin ratio equals: A) 4.2%. B) 24.1%. C) 75.9%. D) $83,750. E) $264,050.
A company's net sales were $676,600, its cost of good sold was $236,810 and its net income was $33,750. Its gross margin ratio equals: A) 5%. B) 9.6%. C) 35%. D) 65%. E) 285.7%.
A company had net sales and cost of goods sold of $752,000 and $543,000, respectively. Its net income was $17,530. The company's gross margin ratio equals: A) 18.9% B) 24.5% C) 27.8% D) 34.7% E) 35.2%
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