Which Ratio Is a Measure of the Profit Available to Common

question 1

Multiple Choice

Which ratio is a measure of the profit available to common shareholders on each share of common stock outstanding?

• A)Price-earnings ratio
• B)Earnings per share
• C)Return on total assets
• D)Return on common stockholders' equity

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Definitions:

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for financing payroll, accounts payable, and inventories.

Simple Interest

Interest that is computed solely on the initial sum invested or loaned, not taking into account any accumulated interest from previous periods.

Face Value

The nominal or dollar value printed on a security or financial instrument, representing its value upon maturity or redemption.

Treasury Bill

A short-term government security issued at a discount from the face value and yielding the face value upon maturity.