Which of the ratios listed helps to indicate pricing strategy or competition intensity?
A) Current ratio
B) Profit margin
C) Quick ratio
D) Return on assets

Question

Quizplus · Accepted Answer

Profit margin ratio is the best choice to indicate pricing strategy or competition intensity. A higher profit margin indicates that a company has higher pricing power compared to its competitors, which may show the competition is weaker. On the other hand, a lower profit margin may indicate fierce competition and lower pricing power.

Which of the Ratios Listed Helps to Indicate Pricing Strategy