Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

14. Financial Statement Analysis

Ratios: Profit Margin

Financial Accounting

14. Financial Statement Analysis

Ratios: Profit Margin

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Multiple Choice

Which of the following is a universally accepted measure of profitability?

Inventory Turnover

Profit Margin

Current Ratio

Debt-to-Equity Ratio

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Understand the concept of profitability: Profitability measures how effectively a company generates profit relative to its revenue, assets, or equity.

Review the given options: Inventory Turnover, Profit Margin, Current Ratio, and Debt-to-Equity Ratio. Determine which one directly relates to profitability.

Analyze Inventory Turnover: This metric measures how efficiently a company sells and replaces its inventory, but it does not directly measure profitability.

Analyze Current Ratio and Debt-to-Equity Ratio: These are liquidity and solvency ratios, respectively, and focus on financial stability rather than profitability.

Identify Profit Margin: Profit Margin is a universally accepted measure of profitability because it calculates the percentage of revenue that remains as profit after expenses. It directly reflects the company's ability to generate profit.