Which of the following describes the change in gross profit ratio and expense ratio from 2014 to 2015?
| Gross profit ratio (gross profit ÷ sales) | Expense ratio (total expenses ÷ sales) |
|-------------------------------------------|----------------------------------------|
|(A) | Improved |
|(B) | Worsened |
|(C) | Improved |
|(D) | Worsened | - HSC - SSCE Business Studies - Question 17 - 2015 - Paper 1
Question 17
Which of the following describes the change in gross profit ratio and expense ratio from 2014 to 2015?
| Gross profit ratio (gross profit ÷ sales) | Expense ratio (... show full transcript
Worked Solution & Example Answer:Which of the following describes the change in gross profit ratio and expense ratio from 2014 to 2015?
| Gross profit ratio (gross profit ÷ sales) | Expense ratio (total expenses ÷ sales) |
|-------------------------------------------|----------------------------------------|
|(A) | Improved |
|(B) | Worsened |
|(C) | Improved |
|(D) | Worsened | - HSC - SSCE Business Studies - Question 17 - 2015 - Paper 1
Step 1
Gross profit ratio (gross profit ÷ sales)
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Answer
To assess the change in the gross profit ratio from 2014 to 2015, we calculate gross profit divided by sales. If the resulting value has increased, it is considered 'Improved'; if it has decreased, it is regarded as 'Worsened'.
Step 2
Expense ratio (total expenses ÷ sales)
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Answer
Similarly, the expense ratio is calculated by dividing total expenses by sales. If this ratio has decreased, the expense ratio is 'Improved'; if it has increased, it is marked as 'Worsened'.
Step 3
Conclusion
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Answer
Based on typical reporting trends, if the gross profit ratio shows improvement while the expense ratio worsens or remains unchanged, the appropriate choice would be (A) Improved for gross profit ratio and Improved for expense ratio.
