Ratio Analysis Quiz

What is Gross Profit Margin (GPM) an indicator of?

• The efficiency of a firm in making and selling its product.

• The total revenue of a firm.

• The net profit margin of a firm.

• The return on capital employed by a firm.

Which of the following is NOT considered an internal factor affecting Gross Profit Margin?

• Size of the firm.

• Quality of stock control.

• Type of industry the firm operates in.

• Management of expenses.

How does a supermarket chain typically manage its Gross Profit Margin compared to a corner shop?

• By having higher expenses relative to sales.

• By spreading its costs over a large number of sales.

• By exclusively selling high-margin items.

• By reducing the size of the firm.

What is the Gross Profit Margin percentage in the provided example where the Gross Profit is £438,700 and Sales are £956,500?

• 45.8%

• 50%

• 55%

• 60%

What does GPM stand for in the context of business profitability ratios?

• Gross Profit Margin

• General Pricing Mechanism

• Gross Performance Metric

• General Profit Margin

Which factor is NOT a reason for variations in NPM across different businesses?

• The age of the business

• The type of business

• The size of the business

• The color scheme of the business logo

How is Net Profit Margin (NPM) calculated?

• Net Profit / Gross Profit * 100

• Sales / Net Profit * 100

• Net Profit / Sales * 100

• Gross Profit / Sales * 100

What is considered a good Net Profit Margin (NPM) percentage according to the text?

• Below 5%

• 10% - 17%

• 18% and above

• Exactly 12%

What should the Return on Capital Employed (ROCE) be at a minimum?

• At least 5%

• At least 10%

• At least 15%

• At least 20%

What should you consider if a company's financial figures seem low?

• The company's market share

• The cost of sales and other expenses

• The number of employees

• The geographical location of the company