Pretax Operating Rate of Return on Total Assets Can Be

question 70

Multiple Choice

Pretax operating rate of return on total assets can be decomposed into which of the following items? 1. operating income percentage on sales
2) return on sales
3) total asset turnover
4) total debt to total assets

• A) 1, 3, and 4
• B) 2 and 4
• C) 1 and 2
• D) 1 and 3

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Definitions:

Estimated Bad Debts

An account on the financial statements estimating the amount of receivables that a company does not expect to collect.

Percentage of Sales Method

An accounting technique used to estimate bad debts or the allowance for doubtful accounts based on a predetermined percentage of sales.

Current Revenues

Income generated from the normal business operations within the current accounting period.

Anticipated Current Expenses

Projected expenses that a company expects to incur within the current accounting period.