If net operating revenue is 100k and profit is 20k, what is Profit Earnings Ratio?

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Multiple Choice

If net operating revenue is 100k and profit is 20k, what is Profit Earnings Ratio?

Explanation:
This shows how much profit is earned for each dollar of net operating revenue. It’s calculated by dividing profit by net operating revenue. So with 20,000 profit and 100,000 in revenue, the ratio is 20,000 / 100,000 = 0.20, or 20%. That means the firm earns 20 cents of profit for every dollar of revenue. The other numbers would imply different margins: 0.10 is 10%, 2.0 is 200%, and 5.0 is 500%, which don’t match the given figures.

This shows how much profit is earned for each dollar of net operating revenue. It’s calculated by dividing profit by net operating revenue. So with 20,000 profit and 100,000 in revenue, the ratio is 20,000 / 100,000 = 0.20, or 20%. That means the firm earns 20 cents of profit for every dollar of revenue. The other numbers would imply different margins: 0.10 is 10%, 2.0 is 200%, and 5.0 is 500%, which don’t match the given figures.

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