FINANCIAL RATIO

The gross profit margin ratio is calculated by dividing:

• Profit by sales

• Profit by shareholders’ equity

• Gross profit by sales

• Sales by cost of sales

Financial ratios that tell how well a company can pay off its short-term debts and meet unexpected needs for cash.

• liquidity ratios
• efficiency ratios
• leverage ratios
• profitability ratios

What is the formula for Gross Profit Margin

• Profit / Net sales revenue X 100

• Gross profit / Net sales revenue X 100

• Gross profit / Sales revenue X 100

• Profit / Cost of sales X 100

Assets = Liabilities + Equity

• Balance Sheet
• Income Statement

Examples may include salaries, utilities, rent, insurance, and office supplies.

• Revenue
• Expense
• Net Income
• Net Loss

The income statement can be expressed as an equation:

• Income =Income-Expenses
• Revenue-Expenses = Net Income (Loss)
• Revenue + Expenses = Income/Loss
• Expenses = Net Income + Revenue

If total expenses exceed total revenue, a net loss is reported

• True
• False

The financial statement that reports whether the business earned a profit and also lists the revenues and expenses is called the: 

• Balance Sheet
• Statement of Retained Earnings
• Statement of Cash Flows
• Income Statement

A comparison between two numbers showing how many times one number exceeds the other.

• return on investment
• profitability ratios
• ratio
• efficiency ratios