The number of cents left from each dollar of sales after expenses and income taxes are paid

• A. Debt Ratio
• B. Net Profit on Sales Ratio
• C. Current Ratio
• D. Ratio Analysis

Answer: (B)

The key concept is profitability per dollar of sales after all expenses and taxes. This is the net profit on sales ratio, which measures how much net income remains for every dollar of revenue. It’s essentially the net profit margin: net income divided by sales. Because it can be viewed as cents per dollar, a company earning 0.15 per dollar means 15 cents from each dollar of sales after costs and taxes. This metric focuses on how efficiently a business turns sales into actual profit, unlike leverage or liquidity measures. For comparison, the debt ratio looks at debt relative to assets, the current ratio assesses short-term liquidity, and ratio analysis is the broad practice of evaluating these metrics.