Reducing expenses boosts profit margin

Steps:

• Profit margin = (Net profit / Sales revenue) × 100.
• Net profit = Revenue - Total expenses.
• Identify items that count as expenses in the profit calculation.
• Select the expense that, when reduced, directly increases net profit.

Why A is correct:

• Depreciation is a non-cash expense deducted from revenue to calculate net profit; reducing it lowers total expenses and raises the profit margin per the formula.

Why the others are wrong:

• B: Drawings are owner withdrawals from profit, not an expense affecting the profit calculation.
• C: Trade payables turnover (days) measures payment speed to suppliers; reducing it improves liquidity but does not impact profit margin directly.
• D: Trade receivables turnover (days) measures collection speed from customers; reducing it enhances cash flow but leaves profit margin unchanged.

Final answer: A