Which of the following is true of the gross profit percentage?
A)Gross profit percentage is the same for companies in all industries.
B)Gross profit percentage is used to measure the solvency of a company.
C)The gross profit percentage is one of the most carefully watched measures of profitability.
D)A service company must show its gross profit percentage in its income statement.

Question

Quizplus · Accepted Answer

The gross profit percentage is a measure of profitability that shows how much of each sales dollar remains after deducting the cost of goods sold. It is an important indicator of a company's financial health and is carefully watched by investors, managers, and analysts. The gross profit percentage varies across industries and can be used to compare the performance of companies within the same industry. Service companies do not have a cost of goods sold, so they do not have a gross profit percentage.

Which of the Following Is True of the Gross Profit