BUISENESS MANAGEMENT
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Used to measure a company’s ability to meet long-term obligations.
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Closely related to sales, important condition for a firm’s continuity.
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Return on long term debt
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ability to meet its short Term financial obligations
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Detailed explanation-1: -Gross Profit Ratio is a profitability ratio that measures the relationship between the gross profit and net sales revenue. When it is expressed as a percentage, it is also known as the Gross Profit Margin. A fluctuating gross profit ratio is indicative of inferior product or management practices.
Detailed explanation-2: -Profitability ratios are important because they can catch the attention of investors. When a business is generating good profits, it shows the investors that the business is going to be running smoothly for quite some time. It instills confidence in investors so they can make future investments in the business.
Detailed explanation-3: -The 3 margin ratios that are crucial to your business are gross profit margin, operating profit margin, and net profit margin.
Detailed explanation-4: -Profitability ratios are financial metrics used by analysts and investors to measure and evaluate the ability of a company to generate income (profit) relative to revenue, balance sheet assets, operating costs, and shareholders’ equity during a specific period of time.