The Numerator of the Rate Earned on Total Assets Ratio

question 37

Multiple Choice

The numerator of the rate earned on total assets ratio is

• A) net income
• B) net income plus tax expense
• C) net income plus interest expense
• D) net income minus preferred dividends

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Definitions:

Unrealized Profits

Profits that have been earned but not yet realized through a transaction, such as an increase in value of an investment that has not been sold yet.

Inventory

the totality of goods and materials held by a company for the purpose of resale, manufacturing, or repair.

Consolidation

The act of merging several items into a single or unified whole, commonly used in contexts of financial accounting to unify financial documents.

Goodwill Impairment

Goodwill impairment occurs when the fair value of goodwill drops below its carried value on the balance sheet, leading to a write-down in its value.