Peak Performance Sporting Goods Company Has Collected the Following Information

question 102

Multiple Choice

Peak Performance Sporting Goods Company has collected the following information about itself and its competitors: Which of the following statements explains the importance of this information?

• A)Return on Sales is an indication of how well Peak Performance is competing with others in the industry in generating income from sales.
• B)Although this information is important to Peak Performance, it is an internal calculation. Investors will not compare Peak Performance's return on sales with others. There are too many other variables such as higher expenses, which may prevent Peak Performance from maintaining the lowest measure.
• C)Unlike other measurements, a firm hopes that its Return on Sales is the lowest in the industry, thus, Peak Performance is neither doing the best nor doing the worst in its industry.
• D)As a profitability measurement, return on sales is not as important to the CFO as earnings per share, because this calculation does not show a dilution of ownership.

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Definitions:

Multiple Regression

An approach in statistics where multiple predictors are used to estimate the outcome of a target variable.

Path Analysis

A specialized type of structural equation modeling used to describe directed dependencies among a set of variables, suitable for analyzing complex causal relationships.

Causality

The concept that an event (the cause) directly leads to another event (the effect) through a causal relationship.

Correlations

Statistical measures that denote the extent to which two or more variables fluctuate together.