Answer: B. When comparing companies in different industries, a higher profit margin always indicates which company has better management performance
Step-by-step explanation:
The profit margin refers to how much profit the company is making given the amount of sales it makes. It is therefore very dependant on the expenses incurred by the company.
This is why comparing management in different industries by using the Profit margin is like comparing apples and oranges. Industries are different and so are their methods of operation. One industry might require more expenses than another and still only make less sales which would impact it's profit margin negatively.
Profit Margin is best used for companies in the same industry.