Gross Profit Ratio for a firm remains same but the Net Profit Ratio is decreasing. The reason for such behavior could be: A. Increase in Costs of Goods Sold, B. If Increase in Expense, OC. Increase in Dividend,

Q: The P/E ratio is most useful in .... :   Comparing the premium that the market places on the total…

A: Several statements have been given about the P/E ratio. We have to find the correct one.

Q: price-earnings ratio that is higher than other similar firms

A: A high price-earning ratio implies more price has to be paid for acquiring the stocks of the firm…

Q: Company X is competing with company Y. These are their ratios:   x y Profit Margin .144 .172 ROA…

A: Profit margin is the margin calculated by comparing the sale value with the cost associated with it.…

Q: Why was the increase in FCI's operating income so much greater than the increase in its net sales?

A: Operating income: Operating income measures the organization's profitability (includes all incomes…

Q: The ratio which indicates the profit that a company makes after paying variable costs of production…

A: Variable costs are those costs which changes with change in level of activity like all operating…

Q: Profitability Ratios:

A: Ratio:   It is a number expressed in terms of another to establish relationship between them.

Q: Is this situation consistent with a monopolistically competitive firm maximizing profit? If yes, is…

A: Market Economy- A market economy is an economic system in which market forces, rather than a central…

Q: Let’s say that two firms, A and B have positive profit margins. B’s fixes costs as a percentage of…

A: Fixed costs are expenses that do not change based on production levels; variable costs are expenses…

Q: When sales volume increases, which company will experience a larger percentage increase in profit:…

A: Cost Volume Profit Analysis (CVP Analysis): This analysis is helpful in determining that how any…

Q: l Management) Everything else held constant, will an increase in the amount of inventory on hand…

A: Inventory is very important in business and keeping sufficient inventory is necessary but keeping…

Q: Explain whether the following situations, taken independently, would be favorable or unfavorable: (…

A: Favorable is the condition that is positive for a business. This implies that the variance or the…

Q: When the return on sales (also known as net profit margin) is negative, what does this mean? Group…

A: Net profit margin (NPM) or return on sales measures the profitability of the company. Higher the…

Q: 1 The use of alternative accounting methods will result in a lower price-earnings ratio. A: True B:…

A: Accounting methods:- An accounting methods are defined as those methods, which can be adopted by…

Q: Explain what the significance of having a high/low Price-to-Book ratio means about the company's

A: Price/Book value is ratio of stock price in actual market and book value is value of share as books…

Q: ending inventory increases therefore net income under AC and VC will be same Select one: True False

A: The income statement can be prepared using various approaches as contribution margin or absorption…

Q: Does an increase in the operating profitability ratio always causean increase in the value of…

A: Answer: Usually, company’s operating profitability ratio’s measure how far management will strive to…

Q: The operating break-even sales level is not sensitive to which of the following variables? fixed…

A: Operating break even sales level-It is a point at which a company's total revenue equals its total…

Q: Accounting Just because the gross profit margin is positive does not mean that a company will be…

A: Ratio analysis is a tool that establishes a relationship between the different items. It is used to…

Q: Show with a formula that describes the average estimatesustainable sales growth. Then, make a clear…

A: Sustainable growth means Growth for the future customers such as petroleum industries advertise…

Q: Based only on the information above, the most appropriate conclusion is that, over the period FY13…

A: Return on equity is the ratio which shows the earning capacity of the equity shareholders’ funds and…

Q: What is the relationship between revenue and net income on the Income Statement? As contribution…

A: Revenue represents the total income generated by a company from its primary operations, such as…

Q: return on investment

A: First option is wrong because the return on investment will increase if the invested capital…

Q: Consider the following three conditions: I. An increase in sales II. An increase in operating assets…

A: The formula to calculate Return on Investment is: Return on Investment = Net Profit/ Cost of…

Q: By modifying the break-even equation, a company is able to determine the sales required to earn a…

A: ·        CVP analysis is used to identify the changes in costs and volume affect a company's…

Q: T F If a firm’s sales revenues exceed its expenses,the firm has earned a profit

A: The net income is the net profit of the company earned during the period. The net income includes…

Q: ULTIPLE CHOICE. Answer the following: 1.It show how efficient the business is as to its purchase or…

A: Ratios are very important in the comparing the performance of company with other similar companies…

Q: Profit maximization objective helps to: a. Increase the liquidity position of the business b. Reduce…

A: Two types of maximization Wealth maximization and profit maximization

Q: Assuming everything else constant, which of the following will NOT make net profit margins increase?…

A: The objective of the question is to identify which of the given scenarios will not lead to an…

Q: When sales volume is rising do companies with a larger percentage of variable expenses or companies…

A: Hence companies with a larger percentage of variable expenses provide a larger percentage increase…

Q: Suppose sales volume increase by the same percentage for Company X and Company Y.  Use CVP analysis…

A: Cost volume profit (CVP) analysis is the one which is helpful in analyzing the costs and profits of…

Q: This refers to the point in the breakeven chart that indicates the sales volume at which the…

A: Break-even point (B.E.P.) is defined as the level of the production, where the production cost of…

Q: (a) Explain one reason why gross profit margin of Firm-B is lower than that of Firm-A. (b) Suggest…

A: Gross profit margin = gross profit/sales = (sales - cost of goods sold)/sales Net profit margin =…

Q: The equation for Gross Profit is "Gross Profit = Revenues - Cost of Goods." Which of the following…

A: Gross income is direct income of a business generated from direct revenues of the company. It is an…

Q: If a company is using the lower-of-cost-or-market rule and a write-down is required, how will that…

A: Cost of ending inventory (asset) can be decreased as an adjustment.   An adjusting entry needs to be…

Q: True or False: All else being equal, a decrease in a company's profit margin will result in an…

A: Return on assets = Net income / Total assets So, if the profit margin decreases then, the return on…

Q: If company A has a higher degree of operating leverage than company B, then which of the following…

A: Variable expenses are those costs that occur in proportionate to the units produced or revenue…

Q: Profitability earning is a real barometer to measure the Select one: O a. Sales of business firm O…

A: Profitability earning is a key parameter of assessing the management of the organization and is an…

Q: What can you say about the market value of the company? is it positve or is negative?

A: In finance market value of a company is the worth of the company and the worth of the company is…

Q: Yes, because operating income increases.

A: It is pertinent to note that higher the contribution higher the operating income since fixed cost…

Q: Financial leverage indicates -

A: Financial Leverage: It is the use of debt capital for purchasing more assets. The company takes…

Q: y profit margin is 0.6 and the current ratio is 0.6, is it advisable to invest in

A: Profit margins and liquidity is very important parameter for company and they must be good and…

Q: 1. Which of the following shows the degree of operating leverage? The percentage change in the sales…

A: The degree of financial leverage (DFL) is a financial metric that measures the sensitivity of a…