All of the Following Statements Regarding the Gross Profit Ratio

Multiple Choice

All of the following statements regarding the gross profit ratio are true except:

A) Managers, investors, and creditors use the gross profit ratio to measure one aspect of profitability.
B) The gross profit ratio alone is sufficient to determine a company's profitability.
C) If a company's net sales were $200,000 and cost of goods sold were $120,000, its gross profit ratio would be 40%.
D) The gross profit ratio explains how many cents on every dollar are available to cover
Expenses other than cost of goods sold and to earn a profit.