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What could be the correct analysis when profit margin decreases in an enterprise?

Answer and explanation

Correct answer: Costs increased or pricing became weak

Profit margin reflects the profit earned in relation to sales. It can decrease when input, labour, transport, or other operating costs rise, or when the selling price is too low for the value and cost involved. The entrepreneur should compare revenue and cost records, check pricing and efficiency, and investigate changes in product mix. A short name or blaming customers is not financial analysis.

Related tags

Profit-MarginCost-AnalysisConceptNature And Importance Of Business FinanceConcept Nature And Importance Of Business FinanceSources Of Business FinanceBusiness StudiesClass 11 Mcq

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