What does the profit margin measure?
A)The percentage of each sales dollar that the entity earns in profit.
B)The amount of profit available to meet operating expenses.
C)The amount of profit being generated by the company's assets.
D)The average time it takes the company to turn inventory into profit.

Question

Quizplus · Accepted Answer

The profit margin is a financial ratio that measures the amount of profit a company is able to generate as a percentage of its total revenue or sales. It shows the percentage of each sales dollar that the company earns in profit after all expenses have been paid. It is a key indicator of the company's profitability and financial health.

What Does the Profit Margin Measure