Cost of goods sold / Net Sales has increased from 55 % to 67% and Operating Expenses / Net Sales increased from 17 % to 20 % , which of the following is NOT TRUE ? a) Both Gross Margin and the operating Margin must have decreased b) Gross margin must have decreased from 45% to 33 % c) Operating Margin must have increased d) Operating profit margin must have decreased from 28% to 23%
Cost of goods sold / Net Sales has increased from 55 % to 67% and Operating Expenses / Net Sales increased from 17 % to 20 % , which of the following is NOT TRUE ?
a) Both Gross Margin and the operating Margin must have decreased
b) Gross margin must have decreased from 45% to 33 %
c) Operating Margin must have increased
d) Operating profit margin must have decreased from 28% to 23%
Cost of goods sold / Net Sales ratio defines the expenses of cost of goods sold as compared to sales.
Operating Expenses / Net Sales ratio defines the operating expenses as compares to sales.
Gross Margin
= Net Sales - Cost of goods sold
or
1 - Cost of goods sold / Net Sales ratio
Operating Margin
= Gross margin - operating expenses
or
1 -Cost of goods sold / Net Sales ratio - Operating Expenses / Net Sales ratio
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