Which of the Following Financial Statements Would Be Most Useful

question 51

Multiple Choice

Which of the following financial statements would be most useful if an analyst wants to know the profitability of a company?

• A) income statement
• B) balance sheet
• C) statement of owner's equity
• D) statement of cash flows

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Definitions:

Asset Turnover

Asset turnover is a financial ratio that measures the efficiency of a company in using its assets to generate sales or revenue.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, representing the wear and tear or obsolescence of the asset.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was put into use, reducing its book value on the balance sheet.

Asset Turnover

A financial ratio that measures how efficiently a company uses its assets to generate sales, calculated by dividing total revenues by average assets.