Question
Decision makers and analysts look deeply into profitability ratios to identify trends in a companys profitability. Profitability ratios give insights into both the survivability of
Decision makers and analysts look deeply into profitability ratios to identify trends in a companys profitability. Profitability ratios give insights into both the survivability of a company and the benefits that shareholders receive. Identify which of the following statements are true about profitability ratios. Check all that apply.
a) A higher operating margin than the industry average indicates either lower operating costs, higher product pricing, or both.
b) If a companys operating margin increases but its profit margin decreases, it could mean that the company paid more in interest or taxes.
c) An increase in a companys earnings means that the profit margin is increasing.
d) If a company issues new common shares but its net income does not increase, return on common equity will increase.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started