_____ Is an Indicator of How Profitable a Company Is

question 32

Short Answer

_____ is an indicator of how profitable a company is relative to its assets and indicates how efficient management is at using its assets to generate earnings.

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Definitions:

External Financing Requirement

A measure of how much financing a company needs to sustain and grow its operations, typically sourced from outside the company, such as loans or equity investments.

Asset-Based Borrowings

Loans secured by a company's assets, where the borrowing capacity is based on the value of the collateralized assets.

Financial Foundation

The basic financial resources, systems, and principles that support and sustain an individual's or organization’s economic stability and growth.

Equity Dilution

The decrease in existing shareholders' ownership percentages of a company as a result of the company issuing more shares.