Which of the following statements are true about profitability ratios? Check all that apply. If a company has a net profit margin of 10%, it means that the company earned a net income of $0.10 for each dollar of sales. If a company’s operating margin increases but its profit margin decreases, it could mean that the company paid more in interest or taxes. An increase in the return on assets ratio implies an increase in the assets a firm owns. If a company issues new common shares but its net income does not increase, return on common equity will increase.
Which of the following statements are true about profitability ratios? Check all that apply. If a company has a net profit margin of 10%, it means that the company earned a net income of $0.10 for each dollar of sales. If a company’s operating margin increases but its profit margin decreases, it could mean that the company paid more in interest or taxes. An increase in the return on assets ratio implies an increase in the assets a firm owns. If a company issues new common shares but its net income does not increase, return on common equity will increase.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Which of the following statements are true about profitability ratios? Check all that apply.
- If a company has a net profit margin of 10%, it means that the company earned a net income of $0.10 for each dollar of sales.
- If a company’s operating margin increases but its profit margin decreases, it could mean that the company paid more in interest or taxes.
- An increase in the return on assets ratio implies an increase in the assets a firm owns.
- If a company issues new common shares but its net income does not increase, return on common equity will increase.
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