If a ﬁrm is having diﬃculty controlling its operating expenses, the trouble will be most directly reﬂected in the ﬁrm's ________________ ratios.
A) liquidity
B) proﬁtability
C) market value
D) asset management
E) long-term solvency

Question

Quizplus · Accepted Answer

If a firm is having difficulty controlling its operating expenses, it will impact its profitability ratios, such as gross profit margin, operating profit margin, and net profit margin. These ratios show how much profit the company generates from its sales after deducting all expenses, including operating expenses. If the operating expenses are high, the profit margins will be low, indicating poor profitability.

If a ﬁRm Is Having Diﬃculty Controlling Its Operating Expenses