840-425 · Question #155
What does a company's profit margin reveal?
The correct answer is B. the efficiency of the company. The gross profit margin ratio, also known as gross margin, is the ratio of gross margin expressed as a percentage of sales. Gross margin, alone, indicates how much profit a company makes after paying off its Cost of Goods sold. It is a measure of the efficiency of a company…
Question
What does a company's profit margin reveal?
Options
- Athe amount of profit upon which corporation tax is payable.
- Bthe efficiency of the company.
- Cthe total value of the business
- Dthe gross income from all business activities.
How the community answered
(58 responses)- A7% (4)
- B74% (43)
- C3% (2)
- D16% (9)
Explanation
The gross profit margin ratio, also known as gross margin, is the ratio of gross margin expressed as a percentage of sales. Gross margin, alone, indicates how much profit a company makes after paying off its Cost of Goods sold. It is a measure of the efficiency of a company using its raw materials and labor during the production process. The value of gross profit margin varies from company and industry. The higher the profit margin, the more efficient a company is. This can be assigned to single products or an entire company. https://strategiccfo.com/gross-profit-margin-ratio-analysis/
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