{"id":53068,"date":"2024-04-15T23:48:36","date_gmt":"2024-04-15T23:48:36","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=53068"},"modified":"2024-04-15T23:48:36","modified_gmt":"2024-04-15T23:48:36","slug":"higher-the-ratio-the-more-favourable-it-is-this-statement-does-not-apply-with-respect-to","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/higher-the-ratio-the-more-favourable-it-is-this-statement-does-not-apply-with-respect-to\/","title":{"rendered":"&#8220;Higher the ratio, the more favourable it is&#8221;. This statement does not apply with respect to"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;Stock Turnover Ratio&#8221; option2=&#8221;Net Profit Ratio&#8221; option3=&#8221;Gross Profit Ratio&#8221; option4=&#8221;Operating Ratio&#8221; correct=&#8221;option1&#8243;]<!--more--><\/p>\n<p>The correct answer is: <strong>A. Stock Turnover Ratio<\/strong><\/p>\n<p>A stock turnover ratio is a measure of how efficiently a company manages its inventory. It is calculated by dividing the cost of goods sold by the average inventory. A higher stock turnover ratio indicates that a company is selling its inventory more quickly, which can be a sign of good management. However, a very high stock turnover ratio can also indicate that a company is not holding enough inventory to meet customer demand.<\/p>\n<p>The other options are all measures of profitability, and a higher ratio for these measures generally indicates better performance.<\/p>\n<ul>\n<li><strong>Net profit ratio<\/strong> is a measure of how much profit a company makes after accounting for all expenses. It is calculated by dividing net income by net sales. A higher net profit ratio indicates that a company is more profitable.<\/li>\n<li><strong>Gross profit ratio<\/strong> is a measure of how much profit a company makes from its sales before accounting for expenses other than the cost of goods sold. It is calculated by dividing gross profit by net sales. A higher gross profit ratio indicates that a company is more profitable.<\/li>\n<li><strong>Operating ratio<\/strong> is a measure of how much a company spends on operating expenses relative to its sales. It is calculated by dividing operating expenses by net sales. A lower operating ratio indicates that a company is more efficient in its use of resources.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;Stock Turnover Ratio&#8221; option2=&#8221;Net Profit Ratio&#8221; option3=&#8221;Gross Profit Ratio&#8221; option4=&#8221;Operating Ratio&#8221; correct=&#8221;option1&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"class_list":["post-53068","post","type-post","status-publish","format-standard","hentry","category-accounting","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>&quot;Higher the ratio, the more favourable it is&quot;. 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This statement does not apply with respect to","og_description":"[amp_mcq option1=&#8221;Stock Turnover Ratio&#8221; option2=&#8221;Net Profit Ratio&#8221; option3=&#8221;Gross Profit Ratio&#8221; option4=&#8221;Operating Ratio&#8221; correct=&#8221;option1&#8243;]","og_url":"https:\/\/exam.pscnotes.com\/mcq\/higher-the-ratio-the-more-favourable-it-is-this-statement-does-not-apply-with-respect-to\/","og_site_name":"MCQ and Quiz for Exams","article_published_time":"2024-04-15T23:48:36+00:00","author":"rawan239","twitter_card":"summary_large_image","twitter_misc":{"Written by":"rawan239","Est. reading time":"1 minute"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/exam.pscnotes.com\/mcq\/higher-the-ratio-the-more-favourable-it-is-this-statement-does-not-apply-with-respect-to\/","url":"https:\/\/exam.pscnotes.com\/mcq\/higher-the-ratio-the-more-favourable-it-is-this-statement-does-not-apply-with-respect-to\/","name":"\"Higher the ratio, the more favourable it is\". 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