Which of the following statements is are true I Gross and n

Which of the following statements is (are) true:

I : Gross and net profit ratios are key performance indicators for a company.

II: Both gross and net profit ratios should be looked at on a regular basis.

Solution

Option 2: Both statements are true.
1) Gross profit reflects the trading profit of the company and net profit is what the earnings of the shareholders. Hence shareholders are keen on netprofit ratio.

2)Many companies prepare interim financial statements as a part of regulatory reforms to analyse the company performance as of the date. Hence, for the same both gross and net ratios should be looked at on a regular basis.