What kind of information does a company's rate of return on net sales provide?
A) What proportion of each dollar of sales revenue generates net income
B) What proportion of each dollar of sales revenue generates gross profit
C) The proportion of sales returns and allowances to gross sales revenue
D) How effectively a company collects cash on credit sales

Question

Quizplus · Accepted Answer

A company's rate of return on net sales provides information about what proportion of each dollar of sales revenue generates net income. This ratio is important because it shows the profitability of a company's operations after considering all expenses. A higher rate of return on net sales indicates that more revenue is being converted into net income, which is a positive signal for investors.

What Kind of Information Does a Company's Rate of Return