How should gross profit margin be analyzed for firms having more than one revenue source?
A) The overall gross profit margin should be calculated for all revenue sources.
B) Gross profit margin cannot be analyzed if a firm has multiple revenue sources.
C) A separate gross profit margin for each revenue source should be calculated.
D) The gross profit margins from each revenue source should be calculated and then averaged.

Question

Quizplus · Accepted Answer

In order to accurately analyze the gross profit margin for a firm with multiple revenue sources, it is important to calculate the gross profit margin for each individual revenue source separately. This allows for a more detailed understanding of where the strengths and weaknesses lie in each area of the business. Simply calculating an overall gross profit margin could mask performance issues in specific revenue streams.

How Should Gross Profit Margin Be Analyzed for Firms Having