Asked by Denise White on Jun 22, 2024
Verified
Profit margin can be decomposed into its individual factors including COGS/Sales and Taxes/Sales.
Profit Margin
A financial metric used to evaluate a company's profitability, calculated as net income divided by revenue.
COGS/Sales
COGS/Sales is a financial ratio that measures the cost of goods sold against the total sales revenue, often used to assess the efficiency of production.
Taxes/Sales
A ratio that shows the proportion of taxes paid relative to total sales revenue, often used in financial analysis.
- Understand the critical role of assessing operating income, profit ratios, and their determinants.
Verified Answer
BG
Beverly GammadJun 27, 2024
Final Answer :
True
Explanation :
Profit margin is calculated as (Revenue - COGS - Operating expenses - Taxes) / Revenue. Therefore, COGS/Sales and Taxes/Sales are individual factors that affect the profit margin.
Learning Objectives
- Understand the critical role of assessing operating income, profit ratios, and their determinants.