To Assess Whether or Not a Firm Is Earning an Adequate

question 7

Multiple Choice

To assess whether or not a firm is earning an adequate rate of profit,return on capital employed (ROCE) is a better indicator than return on sales because:

• A)Sales are more variable than capital employed
• B)Return on sales varies between industries according to their capital intensity
• C)A firm's return on sales depends upon the choice between gross margin,operating margin,and net margin
• D)ROCE is based upon cash flow

---

Definitions:

Merchandise

Products or goods that are bought, sold, or traded in the retail or wholesale market.