Which of the following could explain why a company has a lower net profit margin ratio but a higher EPS than one of its competitors?
A)The company sells a higher percentage of goods on credit.
B)The company has fewer shares of outstanding common stock relative to its net income.
C)The company earns a higher percentage of net income from non-operating activities.
D)The company pays a higher dividenD.Net profit margin = net income/sales

Question

Quizplus · Accepted Answer

A lower net profit margin ratio means the company has lower earnings compared to its sales. However, if the company has fewer shares of outstanding common stock, its earnings are distributed among a smaller number of shares, resulting in a higher EPS.

Which of the Following Could Explain Why a Company Has