Which of the Following Terms Describes an Organization's Net Profit

question 94

Multiple Choice

Which of the following terms describes an organization's net profit after taxes divided by its total assets?

• A)Gross profit margin
• B)Return on capital
• C)Return on investment
• D)Operating margin
• E)The current ratio

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Definitions:

Retained Earnings

The portion of net income not distributed as dividends but retained by the company to reinvest in its core business or to pay debt.

Partial Equity Method

A variation of the equity method in accounting, where the investor recognises income from the investee to the extent of dividends received, with some adjustments.

Initial Value Method

An accounting method which records assets and investments at their original purchase cost.

Lower-of-Cost-or-Market-Value

An accounting principle requiring that inventory be recorded at the lower of either its historical cost or its current market value.