Shareholders of a Publicly Traded Company Want to Assess the Return

question 23

Multiple Choice

Shareholders of a publicly traded company want to assess the return on their investment. The shareholders should use the following ratio to help specifically assess this:

• A) Gross profit margin.
• B) ROE.
• C) ROA.
• D) Profit margin.

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Definitions:

Activity-Based Costing

A costing method that assigns costs to products or services based on the activities and resources that go into their production.

Equipment Depreciation

The process of allocating the cost of tangible assets over its useful life, representing how much of the asset's value has been used up.

Supervisory Expense

Supervisory expense relates to the costs associated with the oversight and management of employees or production processes, often part of overhead costs.

Activity Rate

The predetermined rate used to allocate overhead costs to cost objects based on activities.