Changes in the profit margin ratio could indicate changes in any of the following EXCEPT changes in
A) sales volume.
B) product profitability.
C) the cost structure.
D) the pricing policy.

Question

Quizplus · Accepted Answer

Profit margin ratio is the ratio of net income to net sales and indicates the percentage of each dollar of sales that is left after all expenses are paid. Changes in the profit margin ratio could indicate changes in product profitability, the cost structure, or the pricing policy. However, changes in sales volume would not directly affect the profit margin ratio since it is calculated based on a percentage of sales.

Changes in the Profit Margin Ratio Could Indicate Changes in Any