How Many of These Ratios Measure the Adequacy of Profits

question 41

Multiple Choice

How many of these ratios measure the adequacy of profits?
Profit before interest and finance costs/ finance costs
Profit compared to total assets
Profit compared to sales
Profit compared to equity

• A) 1
• B) 2
• C) 3
• D) 4

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Definitions:

Functional Currency

This represents the primary currency of the economic environment in which a business operates, determining the currency in which its financial statements are presented.

Ending Inventory

The total value of all the goods available for sale at the end of an accounting period, calculated before the start of the next period.

Exchange Rates

The valuation at which one nation's currency can be swapped for another's, pivotal in global finance and affecting import-export pricing.

Acquisition Differential

Represents the excess amount over the fair market value of net assets that is paid by a company to acquire another company.