An Individual Interested in Making a Judgment About the Profitability

question 2

Multiple Choice

An individual interested in making a judgment about the profitability of a company should:

• A)review the trend of working capital for several years.
• B)calculate the company's ROI for the most recent year.
• C)review the trend of the company's ROI for several years.
• D)compare the company's ROI for the most recent year with the industry average ROI for the most recent year.

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Definitions:

Journal Entries

The records of financial transactions in the accounting system that document the effects on accounts in a double-entry bookkeeping system.

Dividend Yield

A metric showing the annual dividends a company distributes in comparison to its stock price.

Preferred Shareholders

Investors who own preferred shares in a company, usually entitled to dividends before common shareholders and with certain other financial rights.

Market Price

The current price at which an asset or service can be bought or sold in a market.