A 10% reduction in the cost of sales as a percent of sales will have the same impact on a firm's enterprise and equity values as a 10% increase in revenue.

Question

Quizplus · Accepted Answer

A 10% reduction in the cost of sales directly improves profit margins and thus profitability, affecting both enterprise and equity values positively but not necessarily to the same extent as a 10% increase in revenue. The impact of revenue increase also depends on cost structures and can lead to different effects on profitability and value.

A 10% Reduction in the Cost of Sales as a Percent