Although Several Different Measures of Profitability Exist, Many Authorities in the Measurement

question 50

Multiple Choice

Although several different measures of profitability exist, many authorities in the measurement of profitability argue that which of the following is the best measurement because "it focuses on the true operating performance of the company"?

• A) Return on invested capital
• B) Net profit margin
• C) Return on equity
• D) Capital turnover
• E) Return on sales

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Definitions:

Reasonable Opportunity

An equitable standard ensuring individuals have a fair chance to take action or defend themselves within a certain timeframe or under certain conditions.

Alteration

A change or modification in something, often referring to physical changes to documents or objects.

Drawer

In the context of financial instruments, the individual or entity that writes and signs a check, effectively instructing the bank to pay the specified amount to the party named or to the bearer.

Charging

The process of imposing a charge or fee for services rendered or for access to facilities or information.