All else the same, firms with higher net profit margins should have higher P/S ratios.

Name: All else the same, firms with higher net profit margins should have higher P/S ratios.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Higher net profit margins indicate that a firm is more efficient at converting sales into actual profit, which can lead to a higher price-to-sales (P/S) ratio as investors may value the firm's sales more highly due to its profitability.

All Else the Same, Firms with Higher Net Profit Margins