Question 23

A company may increase Return on Equity by increasing its:

Group of answer choices

asset turnover.

cost of goods sold.

operating expenses.

Question 242 pts

Which of the following companies should have the highest asset turnover?

Group of answer choices

Fresh fruit and vegetable store

Airplane manufacturer

Software developer

Automobile dealership

Question 252 pts

Formulas

• Accounting equation: Assets = Liabilities and Owner's Equity
• Current ratio: current assets/current liabilities
• Acid test ratio: (current assets - inventory)/current liabilities
• Return on equity: net income/total shareholder's equity
• Return on assets: net income/total assets
• Assets to equity: total assets/shareholder's equity
• Profit margin: net income/net sales (or sales if net sales not available)
• Gross margin: gross profit/sales
• Operating profit or EBIT (Earnings Before Interest and Taxes): net income plus interest and tax
• Sources of Cash (Year Over Year) Assets - (decrease) Liabilities + (increase) Owner's Equity + (increase)
• Uses of Cash (Year Over Year) Assets + (increase) Liabilities - (decrease) Owner's Equity - (decrease)

QUESTION

Gross margin is one of the profitability measures.

Group of answer choices

True

False

Question 262 pts

Formulas

• Accounting equation: Assets = Liabilities and Owner's Equity
• Current ratio: current assets/current liabilities
• Acid test ratio: (current assets - inventory)/current liabilities
• Return on equity: net income/total shareholder's equity
• Return on assets: net income/total assets
• Assets to equity: total assets/shareholder's equity
• Profit margin: net income/net sales (or sales if net sales not available)
• Gross margin: gross profit/sales
• Operating profit or EBIT (Earnings Before Interest and Taxes): net income plus interest and tax
• Sources of Cash (Year Over Year) Assets - (decrease) Liabilities + (increase) Owner's Equity + (increase)
• Uses of Cash (Year Over Year) Assets + (increase) Liabilities - (decrease) Owner's Equity - (decrease)

QUESTION

Profit margin tells us how what percentage of Net Income comes from each dollar of revenue.

Group of answer choices

True

False

Question 272 pts

Formulas

• Accounting equation: Assets = Liabilities and Owner's Equity
• Current ratio: current assets/current liabilities
• Acid test ratio: (current assets - inventory)/current liabilities
• Return on equity: net income/total shareholder's equity
• Return on assets: net income/total assets
• Assets to equity: total assets/shareholder's equity
• Profit margin: net income/net sales (or sales if net sales not available)
• Gross margin: gross profit/sales
• Operating profit or EBIT (Earnings Before Interest and Taxes): net income plus interest and tax
• Sources of Cash (Year Over Year) Assets - (decrease) Liabilities + (increase) Owner's Equity + (increase)
• Uses of Cash (Year Over Year) Assets + (increase) Liabilities - (decrease) Owner's Equity - (decrease)

QUESTION

Which of the following would reduce the gross margin of the company below?

	2019	2018	2017
Sales	$2,300	$1,770	$1,320
Less: Cost of Goods Sold	800	700	750
Gross Profit	1,500	1,070	570
Less: Selling Expenses	220	200	180
Less: Administrative Expenses	120	100	80
Earnings Before Interest and Taxes	$1,160	$770	$310

Group of answer choices

Increase Administrative Expenses

Cutting Selling Expenses by 30% each year

Increasing Costs of Goods Sold by $120 each year

Increasing Sales by $100 each year

Question 282 pts

Which of the following is one of the main ratios that are part of Return on Equity?

Group of answer choices

Economic Income

Cash Flow from Investing Activities

Profit Margin

Cost of Goods Sold