Which of the following could explain an increase in the gross margin ratio?
A) A decrease in bad debts
B) Decreasing prices of raw materials
C) A decrease in depreciation on a delivery vehicle
D) Increasing advertising expenses

Question

Quizplus · Accepted Answer

The gross margin ratio is calculated as (Revenue - Cost of Goods Sold) / Revenue. A decrease in the cost of raw materials directly reduces the Cost of Goods Sold, thereby potentially increasing the gross margin ratio.

Which of the Following Could Explain an Increase in the Gross