BUISENESS MANAGEMENT
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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cost of goods sold increased relative to sales.
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sales increased relative to expenses.
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the Federal Government increased the tax rate.
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dividends were decreased.
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Detailed explanation-1: -The gross profit margin is unchanged but the net profit margin declined over the same period. This could have happened if a cost of goods sold increased relative to sales.
Detailed explanation-2: -The most important are the company’s pricing strategy and its costs of production. If a company lowers its prices, its gross margin will decrease. If a company’s costs of production increase, its gross margin will also decrease.
Detailed explanation-3: -The gross margin is always larger than the net margin, since the gross margin does not include any selling and administrative expenses. Tax effect. The gross margin is not net of any income tax expense, while the net margin does include the effects of income taxes.
Detailed explanation-4: -Gross profit margin is computed by simply dividing net sales less cost of goods sold by net sales. Net profit margin further removes the values of interest, taxes, and operating expenses from net revenue to arrive at a more conservative figure.
Detailed explanation-5: -An increase in the net profit margin would increase the ratio, unless there is also a significant increase in average total assets due to transactions such as a purchase of land at year-end. Land has a significant value and therefore would increase average total assets and could cause a decline in return on assets.