Return on Investment Can Be Broken into Two Components

question 31

Multiple Choice

Return on investment can be broken into two components:

• A)profit margin and asset turnover.
• B)contribution margin and asset turnover.
• C)segment margin and asset turnover.
• D)profit margin and inventory turnover.

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Definitions:

Operating Cost

Expenses associated with the day-to-day functions of a business, including costs for goods, services, and administration.

Required Rate of Return

The lowest yearly percentage return on an investment that motivates people or businesses to invest in a specific project or financial vehicle.

CCA Class

A grouping in Canadian tax law under the Capital Cost Allowance, determining the rate at which assets can be depreciated for tax purposes.

Discount Rate

The interest rate used to discount future cash flows to their present value, significant in determining the attractiveness of an investment.