Sales, Gross and Operating Profit Metrics

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Gross profit is sales less COGS; gross margin is gross profit divided by sales.

Operating profit (EBIT) is gross profit less operating expenses; operating margin is operating profit divided by sales.

If the company were cutting prices, their gross profit margin would decline; it hasn’t, so (a) is incorrect.

If the company were spending heavily on R&D, operating expenses would increase, so operating profit margin would decline, consistent with (b).

If the company were borrowing money, its interest expense would increase, but its gross profit and operating profit wouldn’t change; as the operating profit has declined, © is incorrect.