The Return on Assets Effect (ROA)quantifies and Measures

question 5

Multiple Choice

The return on assets effect (ROA) quantifies and measures:

• A)the indirect contribution of supply management to profitability.
• B)any increase in sales that occurs at a greater rate than the cost of assets.
• C)reduction in the allocations to the operating budget of the supply department.
• D)the impact of supply actions on inventory and the balance sheet.
• E)the effect on profitability of reduced spend compared to a sales increase.

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Definitions:

Law of Diminishing Returns

An economic principle stating that adding more of one factor of production, while holding others constant, will at some point yield lower per-unit returns.

Fixed Factor

An input in the production process that cannot be changed in the short term, such as premises or machinery.

Output Decreasing

A situation where the quantity of goods or services produced by an economy or firm is reducing over time.

Marginal Revenue

The additional income earned by selling one more unit of a good or service, crucial for determining optimal output levels.