Question : Which of the following statements are false with respect of Net profit ratio?
Option 1: Net Profit Ratio establishes the relationship between Net Profit and Revenue from Operations, i.e., Net Sales.
Option 2: Net Profit Ratio is an indicator of overall efficiency of the business. Higher the Net Profit Ratio, better the business.
Option 3: An increase in the ratio over the previous period shows improvement in the operational efficiency and decline means otherwise.
Option 4: None of the above.
Correct Answer: None of the above.
Solution : Answer = None of the above. Net profit Ratio Establishes the Relationship Between Net profit and Revenue from operation The net profit Ratio is an indicator of the overall efficiency of the Business. Higher the Net Profit Ratio Better the Business. Hence, the correct option is 4.
Question : _____________ratio establishes a relationship between gross profit and Revenue from Operations, i.e. Net Sales.
Question : ___________measures the relationship between Operating Profit and Revenue from Operations, i.e., Net Sales.
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