Which of the Following Measures Would Assist in Assessing the Profitability

question 180

Multiple Choice

Which of the following measures would assist in assessing the profitability of a company?

• A)Debt-to-assets ratio
• B)Fixed asset turnover ratio
• C)Receivables turnover ratio
• D)Current ratio

---

Definitions:

Contribution Margin

The difference between sales revenue and variable costs, indicating the amount available to cover fixed costs and generate profit.

Sales Price Variance

The difference between the actual selling price and the expected selling price of a product, multiplied by the number of units sold.

Fixed Overhead Budget Variance

The gap between the planned fixed overhead expenses and the real fixed overhead expenses that were realized.

Variance Reports

Financial documents that compare actual financial results to planned or budgeted amounts, highlighting discrepancies.