The Profitability Criterion Is Measured in Terms of Which of the Following

question 22

Multiple Choice

The profitability criterion is measured in terms of which of the following indexes?

• A)percentage change in sales
• B)return on net assets
• C)price/earnings ratio
• D)percentage cost savings from new processes

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Definitions:

Depreciation Rates

The percentage at which an asset's value is reduced to account for wear and tear over its useful life.

Units-of-activity Method

A depreciation method that allocates the cost of an asset over its useful life based on units of production or use, rather than passage of time.

Straight-line Method

A method of calculating depreciation by evenly allocating the cost of an asset over its estimated useful life.

Salvage Value

The expected residual valuation of an asset at the conclusion of its operational life, commonly included in the calculations for depreciation.