An increase in gross margin of 7% from one period to the next implies that the company's net income will have increased by 7% as well.

Question

Quizplus · Accepted Answer

Gross margin is calculated as the difference between revenue and cost of goods sold, while net income takes into account all expenses. Therefore, an increase in gross margin does not necessarily directly translate to an increase in net income. Other expenses such as overhead costs, taxes, and interest expenses can also impact net income.

An Increase in Gross Margin of 7% from One Period