A firm with a gross profit margin which meets industry standard and a net profit margin which is below industry standard must have excessive

Question

Quizplus · Accepted Answer

If a firm's gross profit margin meets industry standard, it means that its pricing strategy and sales volume are in line with industry norms. Therefore, the issue with a lower net profit margin can be traced back to higher general and administrative expenses, such as salaries, rent, utilities, and other overhead costs. These expenses are outside the scope of cost of goods sold or dividend and principal payments.

A Firm with a Gross Profit Margin Which Meets Industry