Multiple Choice Questions: 1) Which of the following is an expanded form of calculating return on investment?
Question:
Multiple Choice Questions:
1) Which of the following is an expanded form of calculating return on investment?
A) Profit margin ratio × Asset turnover ratio
B) Net profit ratio × Inventory turnover ratio
C) Gross profit ratio × EVA
D) Asset turnover ratio × inventory turnover ratio
2) Which of the following is the correct formula for profit margin ratio?
A) Net profit ÷ Sales
B) Net sales ÷ Average total assets
C) Net profit × Capital invested
D) Operating income ÷ Net sales
3) Which of the following is the correct formula for asset turnover ratio?
A) Net sales ÷ Average total assets
B) Net sales ÷ Cost of goods sold
C) Net Sales ÷ Net assets
D) Net profit ÷ Net sales
4) Which of the following statements most accurately describes residual income?
A) How efficiently a division uses its average assets to generate sales there by profits
B) How much operating income the division earns on every dollar of sales
C) How much return a division generates on average assets
D) How much extra income a division generates above the minimum acceptable level
Cornerstones of Financial and Managerial Accounting
ISBN: 978-1111879044
2nd edition
Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen