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Which of the following fluctuations will result in a lower gross margin? (Select TWO options)
Suggested Answer: B, D
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Gross margin = (Revenue -- Cost of Goods Sold) Revenue
Higher COGS and lower revenue both reduce the margin.
Operating expenses and liabilities impact net profit, not gross margin directly.
SPHR financial literacy requires knowledge of ''how operational changes affect key financial ratios used in strategic planning and compensation modeling''.
12 comments · newest first
HO
Hollis
2 months ago
I’m not so sure about D. What if revenue drops but costs stay low? Still B for sure.
AU
Augustine
2 months ago
Agreed, B and D make sense. Increased costs really impact gross margin.
CH
Chau
2 months ago
I think B and D are the right choices. Higher costs and lower revenue hurt margins.
GA
Gail
2 months ago
I thought decreased liabilities would help, not hurt!
NO
Norah
2 months ago
C is a good option too, but not for lower gross margin.
GR
Gracie
2 months ago
Wait, how does decreased revenue impact gross margin?
LE
Leslie
3 months ago
Totally agree, higher COGS definitely hurts margins!
LA
Lashaunda
3 months ago
B and D are the right choices.
HI
Hildegarde
3 months ago
I feel like decreased operating expenses could help gross margin, but I can't recall if it was ever mentioned in relation to this topic.
NI
Nidia
3 months ago
Increased gross profit seems like it would actually improve gross margin, right? I'm a bit confused about that one.
JO
Johna
3 months ago
I remember a practice question where decreased revenue also impacted gross margin negatively, so I might go with that.
AN
Anjelica
4 months ago
I think increased cost of goods sold definitely lowers gross margin, but I'm not sure about the second option.