Earnings Per Share, Return on Sales, and Return on Equity

question 250

Multiple Choice

Earnings per share, return on sales, and return on equity are examples of

• A) leverage ratios.
• B) liquidity ratios.
• C) equity ratios.
• D) profitability ratios.

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Definitions:

Marginal Revenue

The additional income received from selling one more unit of a good or service, crucial for decision-making in output levels.

Marginal Cost

The price of creating one more unit of a product or service.

Purely Competitive Market

A market structure with many buyers and sellers, where all firms sell identical products and no single buyer or seller can influence the market price.

Economic Profit

The discrepancy between a firm's gross income and its total expenses, factoring in both clear and unclear costs.