A Common Measure of Profitability Is the

question 2

Multiple Choice

A common measure of profitability is the

• A)current ratio.
• B)cash current debt coverage ratio.
• C)return on common shareholders' equity ratio.
• D)debt to total assets ratio.

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Definitions:

Flexible Budget

A budget that adjusts or flexes for changes in the volume of activity, providing a more useful comparison against actual costs than a static budget.

Actual Activity

The real or factual actions or tasks completed within a period, often measured to assess performance or productivity.

Static Budget

A financial plan that does not change or adjust with variations in business activity levels.

Labor Rate Variance

The difference between the actual cost of direct labor and its expected (or standard) cost during a given period.