The gross margin ratio:
Is also called the net profit ratio.
Indicates the percent of sales revenue remaining after covering the cost of the goods sold.
Is also called the profit margin. Is a measure of liquidity and should exceed 2.0 to be acceptable.
Should be greater than 1 for merchandising companies.

The correct order of the question is below:

The gross margin ratio: 1- Is also called the net profit ratio. 2- Indicates the percent of sales revenue remaining after covering the cost of the goods sold. 3- Is also called the profit margin. 4- Is a measure of liquidity and should exceed 2.0 to be acceptable. 5- Should be greater than 1 for merchandising companies.

The answer is 2. Indicates the percent of sales revenue remaining after covering the cost of the goods sold.

Explanation:

Gross profit is the difference between cost of sales and net sales revenue and gross profit margin is calculated by gross profit divided by net sales revenue. It can be expressed as a percentage.

This margin is the first measure of profitability.

Option 1 is wrong. Net profit ratio is the ratio of net profit to sales revenue. Net profit is after all expenses and tax have been deducted from revenue.

Option 4 is wrong. This is not a measure of liquidity. Current ratio and quick ratio are a measure of liquidity.

Option 3 and 5 are wrong

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