Asked by sausage noose on Jun 03, 2024
Verified
How is profit margin calculated? Discuss its use in analyzing a company's performance.
Profit Margin
A financial metric that measures the amount by which revenue from sales exceeds costs in a business, expressed as a percentage of revenue.
- Compute and elucidate the current ratio and its importance in assessing a firm's liquidity position.
Verified Answer
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Nurul Fariha Abdul MuhsinJun 08, 2024
Final Answer :
Profit margin is calculated by dividing net income by net sales.The resulting percent reflects the percent of profit a company makes for every dollar in sales.The profit margin ratio is useful in comparing a company's performance to that of its competitors,and as a relative measure of the company's performance across periods.
Learning Objectives
- Compute and elucidate the current ratio and its importance in assessing a firm's liquidity position.