profitability ratios (1)

Question 1

what does a ratio compare?

Answer 1

one piece of information with another

Question 2

what is the ratio of the gross profit margin?

Answer 2

the two pieces of information compared are the enterprise’s gross profit and its turnover

Question 3

what does the gross profit margin calculate?

Answer 3

gross profit as a percentage of sales revenue

Question 4

what does the gross profit margin show?

Answer 4

what the gross profit is for every t ot sales

Question 5

how do you calculate the gross profit margin?

Answer 5

gross margin profit = gross profit / sales revenue x 100

Question 6

what are the 2 items needed to calculate gross profit margin?

Answer 6

sales revenue and gross profit

Question 7

what will enable an enterprise to calculate its gross profit?

Answer 7

The values for sales revenue minus the cost of these sales

Question 8

what happens if the gross profit margin falls?

Answer 8

the enterprise may take steps to reduce its cost of sales or increase its sales revenue.