Which Measure Would Be Most Useful in Comparing the Operating

question 33

Multiple Choice

Which measure would be most useful in comparing the operating profitability of two firms in different industries?

• A)Net profit margin
• B)Return on equity
• C)Sales to total assets
• D)Return on assets

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Definitions:

Capital Budget

The process of planning and managing a company's long-term investments in major assets or projects.

Surplus Cash

Excess cash held by a company over and above its operating needs and plans, which can be invested or returned to shareholders.

Free Trade Credit

An arrangement where buyers can purchase goods and pay for them later without interest.

Net Purchases

The total amount of goods bought by a company during a period, minus any returns, allowances, or discounts.