The ﬁnancial ratio measured as net income divided by sales is known as the ﬁrm's:
A) Proﬁt margin.
B) Return on assets.
C) Return on equity.
D) Asset turnover.
E) Earnings before interest and taxes (EBIT).

Question

Quizplus · Accepted Answer

The financial ratio measured as net income divided by sales is known as the firm's profit margin. This ratio shows the percentage of each dollar of sales that results in the company's profit after all of the expenses have been paid.

The ﬁNancial Ratio Measured as Net Income Divided by Sales