Question

The ratio of earnings to sales for a given time period is a​ firm's profit margin.

a. True

b. False

Answer 1

The answer is: True

Step-by-step explanation:

The profit margin of a business can be calculated using the following formula:

• gross profit margin = (gross profit / net sales ) x 100
• net profit margin = (net income / net sales) x 100

The difference between them is that the gross profit margin only considers the difference between net sales and COGS, while the net profit margin includes other expenses.