Which of the Following Is NOT a Correct Description of Opportunity

question 412

Multiple Choice

Which of the following is NOT a correct description of opportunity cost of capital?

• A) It is the normal rate of return on investment.
• B) It is normally included in accounting costs.
• C) It is the income sacrificed by not investing in another firm.
• D) It is an implicit cost.

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Definitions:

Return on Assets

Return on Assets (ROA) is a financial ratio that measures the profitability of a company relative to its total assets, indicating how efficient a company is at using its assets to generate profits.

Return on Inventory

A financial metric used to assess how effectively a company generates profits from its inventory investments.

Return on Stockholders' Equity

A financial ratio that measures the profitability of a corporation in relation to stockholders' equity, indicating how effectively equity is used to generate profits.

Asset Management Ratios

Those ratios—accounts receivable turnover, average collection period, inventory turnover, and asset turnover—which measure how effectively a company uses its assets.