True Machine Inc.and One Electrona Inc.are two competing consumer electronics companies.While True Machine's COGS/Revenue is 66%, One Electrona's is 74%.What do you infer from this financial data?
A) One Electrona has a competitive advantage over True Machine.
B) True Machine's profit margin is higher than that of One Electrona.
C) One Electrona is more efficient than True Machine by eight percentage points.
D) True Machine should focus more on driving down costs, while increasing revenues, and One Electrona should focus more on increasing its fixed asset turnover.

Question

Quizplus · Accepted Answer

Cost of goods sold/Revenue indicates how efficiently a company can produce a good. In this case, True Machine Inc.'s profit margin is higher than that of One Electrona Inc.