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Financial Statement Analysis: Net Profit Margin

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Financial Statement Analysis: Net Profit Margin

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Questions and Answers

What is one of the objectives in evaluating the gross profit rate of a business?

To determine the net profit margin rate

To compute the income per peso investment

To calculate the operating profit margin rate

To determine whether the amount of gross profit is sufficient to cover operating expenses (correct)

What does the operating profit margin rate indicate?

The percentage of income per peso investment

The percentage of operating expenses to net sales (correct)

The percentage of gross profit to net sales

The percentage of net profit to net sales

Why is the government not interested in financial statements?

Because financial statements are not relevant to the business

Because it is not a party to any of the transactions of the business (correct)

Because it is not responsible for preparing financial statements

Because financial statements are only for internal use

What does the net profit margin rate present?

A general perspective of the operating performance of the business Signup and view all the answers

What can be determined by computing the net profit margin rate?

The amount of income per peso investment Signup and view all the answers

Who is primarily responsible for preparing and presenting financial statements?

The accountant Signup and view all the answers

What happens to the average sales of a watch store owner when a 20% discount is offered?

They increase from 5 watches to 12 watches a day Signup and view all the answers

What is the discount percentage given to Michelle for buying 20 jars of strawberry jam?

15% Signup and view all the answers

What is the primary objective of evaluating financial statements?

To evaluate the performance of the business Signup and view all the answers

What is the result of offering a discount on a particular brand of watch?

The daily profit increases Signup and view all the answers