Asked by Keely Messer on May 30, 2024
Verified
The net profit margin ratio considers the asset base utilized to earn income.
Net Profit Margin Ratio
A financial metric that shows what percentage of a company's revenues is left over after all expenses have been deducted.
Asset Base
The aggregate value of all of a company's assets, which can include cash, inventory, property, and other tangible and intangible resources.
- Comprehend the primary financial ratios that are used to analyze liquidity, profitability, and leverage.
Verified Answer
PV
Parakh VijayJun 06, 2024
Final Answer :
False
Explanation :
The net profit margin ratio measures the percentage of revenue that remains as profit after all expenses are deducted, but it does not consider the asset base utilized to earn income; that's more relevant to return on assets (ROA) or return on investment (ROI) calculations.
Learning Objectives
- Comprehend the primary financial ratios that are used to analyze liquidity, profitability, and leverage.
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