If Shareholders Want to Know How Much Profit a Firm

question 218

Multiple Choice

If shareholders want to know how much profit a firm is making on their entire investment in the firm, the shareholders should look at the:

• A) Profit margin.
• B) Return on assets.
• C) Return on equity.
• D) Equity multiplier.
• E) Earnings per share.

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Definitions:

Security Interest

A legal claim or lien on collateral that secures the repayment of a debt or obligation, giving the lender rights in the collateral.

Secured Party

The party that holds the interest in a secured property.

Uniform Commercial Code

A comprehensive set of laws governing all commercial transactions in the United States, intended to harmonize the law of sales and other commercial transactions across American jurisdictions.

Purchase-Money Security Interest (PMSI)

A security interest formed when a debtor uses borrowed money from the secured party to buy the collateral.