Accounting Multiple Choice Question – 15 August 2023

Alex plc has a gross profit to sales ratio of 40 %, and a net profit to sales ratio of 10 %.

If the sales volume increases by 8 % which of the following will generally be true?

Select ONE answer:

1. gross profit to sales ratio – Increase AND net profit to sales ratio – Decrease
2. gross profit to sales ratio – Increase AND net profit to sales ratio – Increase
3. gross profit to sales ratio – Unchanged AND net profit to sales ratio – Decrease
4. gross profit to sales ratio – Unchanged AND net profit to sales ratio – Increase

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

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