The expense ratio (total expenses ÷ sales) is always
A - HSC - SSCE Business Studies - Question 17 - 2017 - Paper 1
Question 17
The expense ratio (total expenses ÷ sales) is always
A. the difference between the net profit ratio and the gross profit ratio.
B. the difference between sales and t... show full transcript
Worked Solution & Example Answer:The expense ratio (total expenses ÷ sales) is always
A - HSC - SSCE Business Studies - Question 17 - 2017 - Paper 1
Step 1
A. the difference between the net profit ratio and the gross profit ratio.
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Answer
This statement is incorrect. The expense ratio is not defined as the difference between the net profit and gross profit ratios.
Step 2
B. the difference between sales and the gross profit ratio.
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Answer
This statement is also incorrect. The expense ratio does not represent the difference between sales and the gross profit ratio.
Step 3
C. greater than the gross profit ratio.
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Answer
This is not necessarily true. The expense ratio can vary and is not always greater than the gross profit ratio.
Step 4
D. greater than the net profit ratio.
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Answer
This statement is correct. The expense ratio generally accounts for all expenses, making it greater than the net profit ratio, which considers profits after all expenses.
