Which of the following is an example of a financial ratio?

The gross profit margin is a financial ratio that represents the percentage of revenue that exceeds the cost of goods sold (COGS). It is calculated by taking gross profit (which is sales revenue minus COGS) and dividing it by sales revenue. This ratio indicates how efficiently a company is producing its goods and how well it can control its production costs relative to its sales. A higher gross profit margin suggests that a company is retaining more profit per dollar of sales, which is a critical measure for stakeholders assessing the financial health and operational efficiency of the business.

The other options do not fit the definition of financial ratios: market analysis pertains to evaluating market trends and conditions, customer satisfaction scores measure consumer contentment with products or services, and an operating budget is a financial plan that outlines projected income and expenses over a specific period. None of these options quantify the relationship between financial components in the way that financial ratios do.