A small change in gross profit can result in a much larger change in profit margin if the company has [...]
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high fixed costs.
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7. ANALYSIS OF THE INCOME STATEMENT lining gross profit may indicate increasing costs of production or declining prices. The ratio can be affected by changes in the company's product mix: a change toward items with higher (lower) margin raises (reduces) the gross profit margin. <span>A small change in gross profit can result in a much larger change in profit margin if the company has high fixed costs.
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