A Characteristic of a Good Budget Is

question 108

Multiple Choice

A characteristic of a good budget is

• A)that it is easy to understand by top management.
• B)that is encompasses every account in the firm's accounting system.
• C)that management is satisfied that it will provide shareholders with an adequate return on their investment.
• D)that it is easy to understand and communicate to all within the firm.

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Definitions:

Net Profit Margin Percentage

A financial metric expressing the percentage of revenue remaining after all operating expenses, interest, taxes, and preferred stock dividends have been deducted from a company's total revenue.

Gross Margin

The difference between sales revenue and the cost of goods sold, indicating the profitability of a company's core activity.

Net Operating Income

The profit generated from a company's operational activities, excluding taxes and interest.

Return on Total Assets

Return on Total Assets (ROTA) is a financial ratio that measures a company's profitability relative to its total assets.