Which of the Following Is a Correct Interpretation of a Profit

Multiple Choice

Which of the following is a correct interpretation of a profit margin of 0.20?

A) For each $1 of sales the firm earns twenty cents in net income.
B) For each $1 of sales the firm earns twenty cents before operating expenses.
C) For each $1 of sales, $2 fall to the bottom line.
D) It takes sales of $1 to generate $20 in net profit after taxes.
E) It takes twenty cents in sales to generate $1 in profit.