Which of the following statements are true about profitability ratios? Check all that apply.If a company has a net profit margin of 10%, it means that the company earned a net income of $0.10 for each dollar of sales.If a company’s operating margin increases but its profit margin decreases, it could mean that the company paid more in interest or taxes.An increase in the return on assets ratio implies an increase in the assets a firm owns.If a company issues new common shares but its net income does not increase, return on common equity will increase.

The correct option regarding profitability ratio with proper explanation are as follows

Answered: Which of the following statements are…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Which of the following statements are true about profitability ratios? Check all that apply.

If a company has a net profit margin of 10%, it means that the company earned a net income of $0.10 for each dollar of sales.
If a company’s operating margin increases but its profit margin decreases, it could mean that the company paid more in interest or taxes.
An increase in the return on assets ratio implies an increase in the assets a firm owns.
If a company issues new common shares but its net income does not increase, return on common equity will increase.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions