When Determining the Rate of Return on Assets

question 41

Multiple Choice

When determining the rate of return on assets:

• A)the DuPont model breaks return on assets down into three component ratios that drive it.
• B)the DuPont model calculates the rate of return on assets as the net profit margin ratio times total asset turnover.
• C)it is important for companies to develop strategies to decrease total asset turnover.
• D)total asset turnover measures how much every sales dollar generates in profit.

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Definitions:

Price-elastic

Descriptive of a product or service for which demand significantly increases or decreases as the price changes.

Health Care

The organized provision of medical services to individuals or communities to maintain or improve their health.

Household Budget

A budgeting strategy that distributes anticipated personal earnings into categories for spending, saving, and paying off debts.

Price Elasticity

An assessment of the sensitivity of the demand for an item to shifts in its cost.