Answered: Profitability ratios include the profit…

Profitability ratios include the profit margin on sales, the return on total assets, and the return on common equity. Select one: True Fals

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 7MCQ

See similar textbooks

Related questions

Q: Which of the following is NOT one of the ratios in Profitability group? Select one: a. Quick ratio…

A: Profitability ratios are those ratios which helps in measuring and determining the profitability of…

Q: Calculate the following ratios: return on equity, return on assets (levered), return on sales…

A: Ratio analysis helps business to know the financial position of it using the interpretation of the…

Q: Calculate the Efficiency ratio which includes the sales to total assets ratio, operating return on…

A: The efficiency ratio is one of the most important measure to understand how well the company has…

Q: The Wilson Corporation has the following relationships: Sales/Total assets 2.0 Return on assets…

A: Profit margin is the percentage of profit on total sales. Debt ratio refers to the total percentage…

Q: Which ratio is calculated to ascertain the efficiency of inventory management in terms of capital…

A: Inventory turnover ratio: This is a financial measure that is used to evaluate as to how many times…

Q: Which of the following ratios is most useful in evaluating solvency? a. Receivables turnover ratio.…

A: Solvency ratios disclose the firm's ability to meet its long-term liabilities as and when they…

Q: This ratio is used to reflect t profit earning performance firm's assets return on assets net profit…

A: Solution: Profit earnings performance of the company's assets means that how much of the company's…

Q: What financial ratio is predominantly used to determine profitability?

A: Return on Investment: Return on Investment (ROI) is a performance measuring ratio utilized to assess…

Q: Which of the following financial ratios is not a measure of operating profitablitlity? Return on…

A: Formula: Return on Assets = Net income / Total Assets.

Q: What is the possible link between the following ratios: (a) profitability and efficiency (b)…

A: SOLUTION A- Relation between profitability and efficiency ratios Profitability ratio depicts how…

Q: Match the ratio to the building block of financial statement analysis to which it best relates.A.…

A: Definition: Assets: These are the resources owned and controlled by business and used to produce…

Q: Profitability ratios include all of the following EXCEPT a.current ratio. b.asset turnover. c.return…

A: The profitability ratios measures the ability of the company to generate income with respect to…

Q: 6.. ratios measure the ability of a firm to earn an adequate eturn on sales, O A) Asset utilization…

A: The ratios which measures the ability of an organization to generate adequate earnings are relative…

Q: Profit volume ratio is similar to which of the following ratios? Debtors' turnover ratio Operating…

A: Profit volume ratio shows ratio of contribution margin with sales revenue of the business.

Q: Analyze the company’s profitability and its ability to generate sufficient operating profit by using…

A: Ratio Analysis The purpose of preparing the ratio analysis to know the strength and weakness of the…

Q: Explain the following Investment ratios and indicate how they are computed: Earnings per share (EPS)…

A: Earnings per share (EPS) is ascertained as the benefit of an organization divided by outstanding…

Q: Match the ratio to the building block of financial statement analysis to which it best relates.A.…

A: Gross margin ratio = ( Total revenue - Cost of Goods sold ) / Total revenue.

Q: Which of the following is NOT a profitability ratio? Select one: a. Return on Equity b. Net Profit…

Q: In composite analysis, the items in the Profit and Loss alc are expressed as a percentage of *…

A: Under the composite analysis one variable is taken from the profit and loss statement while another…

Q: Define each of the following terms: d. Forecasted financial statement approach using percentage of…

A: Forecasted financial statement approach using percent of sales: This process begins with future…

Q: What recommendations can be made to a company based on a ratio analysis? (current ratio, cash ratio,…

A: Ratio Analysis is a technique to present the financial position of the company in the simplest,…

Q: Which of the following is a measure of profitability?a. Quick (acid-test) ratiob. Net salesc.…

A: Profitability is that position of the company were the revenue earned is over the expenses incurred…

Q: ompute the following: 1. Horizontal and Vertical Analysis 2. Liquidity Ratios 3. Profitability Ratio

A: Note: Hi! Thank you for the question As per the honor code, We’ll answer the first question since…

Q: Fundamental Analysis a. Price-to-Earnings Ratio b. Solvency Ratio c. Book Value Per Share d. Cash…

A: Technical analysis uses past movements of price and trends to predict the future movement. Hence,…

Q: Requirement 1. Compute the FINANCIAL ratios that measure a. Liquidity • Current ratio • Quick ratio…

A: As per our guidelines, we are supposed to answer only 3 sub parts. For balance answer, please…

Q: 1. Provide a Liquidity Ratio Analysis based on the current Ratio. 2. Provide a Profitability ratio…

A: Ratio Analysis is the analysis of the financial statements of the company which determines the…

Q: Explain profitability ratios

A: SOLUTION:- A profitability ratio is a measure of profitability, which is a way to measure a…

Q: Which of the following is a Profitability Ratio a. Proprietary Ratio b. Debt-Equity Ratio c.…

A: The profitability ratio determines the ability of an entity to generate profits as a result of…

Q: Which one of the following ratios is relevant to assess long-term solvency? A. Current Ratio B.…

A: Since you have asked multiple question, we will solve the first question for you relating to long…

Q: 1. Profitability ratios Name of Ratio Formula Computation Goss profit margin Gross Profit Net Sales…

A: Solution:- 1)Gross profit margin =Gross profit / Net sales x 100

Q: Find for Armstrong Company and Blair Company : Liquidity Ratio (a) Current Ratio Market tests…

A: Liquidity ratios: These ratios reflect the liquidity position of the company to settle its short…

Q: Present formulas and examples of the following financial ratios (Financial ratios) a. gross margin…

A: Financial ratios are used to measure the financial performance of a company . Such ratios provide…

Q: Compute profitability, liquidity, solvency and capital market standing ratios. Using the ratios…

A: Profitability means the ability of firm to generate profit. Firms with higher profitability are…

Q: Compute the following ratio analysis: Return on Equity Return on Assets Gross Profit Margin…

A: Return on equity measures the return of common stockholders in firm . it can be calculated Return on…

Q: Using the information from Louise Company, prepare a fnancial statement analysis using the folowing:…

A: Ratio Analysis The purpose of preparing the ratio to measure the strength and weakness of the…

Q: A common measure of liquidity is a.the asset turnover ratio b.the accounts receivable turnover…

A: Assets turnover ratio means how many times sale is , as compared to average assets. Account…

Q: Which of the following ratios is used to measure the profit earned on each dollar invested in a…

A: Ratio analysis helps in analyzing the performance of the firm. The investors use ratios to determine…

Q: The ratio is the best overall measure of management's performance O a. Activity ratio b. Debt-equity…

A: Operating Efficiency Ratio- Operating Profit Margin/ Operating Efficiency ratio refers to the ratio…

Q: tability Ratios from a company's financial statement, and how such profitability ratios are…

Q: The proportion of profits distributed as dividends is called the and the retained proportion of…

A: Financial ratios refer to an accounting or business metric used by companies for comparing two…

Q: profitability ratios

A: Gross profit ratio = Gross profit * 100/Net sales Operating profit ratio = Operating income *…

Q: Ratios: Which of the following ratios is not considered to be a test of profitability? Long-Term…

A: Profitability ratios are a group of financial indicators that are used to evaluate a company's…

Q: Interpret the results: • Return on equity • Return on assets • Gross profit margin • Operating…

A: The financial ratios are used as a measure of the financial health of the company.

Q: Find the below following: Gross Profit Ratio Operating Ratio Net Profit Ratio Operating (Net) Profit…

A: as per Bartleby guidelines when multiple subparts asked for one single question we can answer 1st 3…

Question

Profitability ratios include the profit margin on sales, the return on total assets, and the return on common equity. Select one: True Fals

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Profitability ratios:

VIEW

Correct answer:

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Which of the following ratios is used to measure a firms profitability? a. Liabilities Ă· Equity c. Sales Ă· Assets b. Assets Ă· Equity d. Net Income Ă· Net Sales
Which of the following is NOT a profitability ratio? Select one:a. Return on Equityb. Net Profit Marginc. Return on Assetsd. Average Collection Period
Which of the following is NOT one of the ratios in Profitability group? Select one: a. Quick ratio b. Gross profit margin c. Return on Assets d. Operating profit margin
What is the possible link between the following ratios: (a) profitability and efficiency (b) profitability and liquidity (c) profitability and investment and (d) efficiency and liquidity
Financial Statement Analysis Compute for Profitability Ratio with Substantial Analysis: a. Gross Profit Margin b. Profit Margin c. Return on Total Assets d. Return on Equity
Compute the following ratio analysis: Return on Equity Return on Assets Gross Profit Margin Write your interpretation after the computation.
Prepare the following Ratio Analysis: 1. Liquidity ratio 2. Activity ratio 3. Solvency Ratio 4. Profitability Ratio
Based on the income statement calculate and explain the profitability ratio and leverage ratio.
Discuss the following profitability ratios: Profit Margin, ROA-Return on Assets, ROI-Return on Investment, and the Gross Margin.
Present formulas and examples of the following financial ratios (Financial ratios)a. gross marginb. profit margin on salesc. return on equity (ROE)
Which of the following ratios is always the lowest? a. The net profit margin b. The gross profit margin c. The operating margin d. The EBITDA ratio
Compute the following: 1. Horizontal and Vertical Analysis 2. Liquidity Ratios 3. Profitability Ratio 4. Efficiency Ratio 5. Financial Leverage