Question

The profit-to-sales relationship is defined by

• A. margins
• B. capital structure
• C. turnover
• D. free cash flow
• E. leverage

Answer 1

Sol:

The profit-to-sales relationship is defined by:

Answer is A. margins

The profit-to-sales relationship is defined as the profit generated in a business with respect to the total sales over a certain period of time. Margin is the amount of profit which is accumulated by the business by selling its goods and services. A company should be efficient enough to generate feasible profit margin form the sales of its goods and services that recover its cost by managing its debt, operating expenses and other business related expenses. Thus profit-to-sales relationship is defined by the profit margins earned by the business on its sale of its goods and service.