Return on Assets Is Most Closely Related to

question 170

Multiple Choice

Return on assets is most closely related to

• A) profit margin and debt to assets ratio.
• B) profit margin and asset turnover.
• C) times interest earned and debt to stockholders' equity.
• D) profit margin and free cash flow.

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Definitions:

Annual Cash Inflows

The total amount of money received by a business within one fiscal year from its operations, investments, and financing activities.

Salvage Value

The estimated residual value of an asset at the end of its useful life, considered for depreciation calculations.

Working Capital Investment

Funds used by a company to finance its day-to-day operations, including investments in inventory and accounts receivable.

Net Present Value

The calculation used to determine the current value of a series of future cash flows by discounting them at a specific rate.