Gross profit ratio for a firm was 20% in the year 2015 and 2016 but the net profit ratio was 15% in the year 2015 and 12% in the year 2016. The reason for such behaviour could be —

CS Executive · Cost and Management Accounting · PYQS · December 2016
Gross profit ratio for a firm was 20% in the year 2015 and 2016 but the net profit ratio was 15% in the year 2015 and 12% in the year 2016. The reason for such behaviour could be —
(A) Increase in manufacturing expenses
(B) Increase in indirect expenses
(C) Increase in cost of goods sold
(D) Decrease in sales.

Answer & Explanation:

Correct Answer: Option (B)

Official answer key: (B).

Topics: Financial Management

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